The Median Line Method for Foreseeing Trends
Below is a stock market index which you will find valuable in anticipating what your stocks are going to do, whether they will continue to rise or fall and how fast. These are the facts everyone wants to know, and this method has not been revealed before to the best of our knowledge. Those who acted on this method got out of their stock either at the end of February or April right near the top.
Start with any pivot such as low pivot 1 and draw a line bisecting the distance between pivots 2 and 3. On April 1st all the information you had as to prices ended at pivot 3. This bisecting line is always a test barrier, whatever pivot you start from. If prices fail to rise above the barrier, the rise is finished, as turns out to be the case at pivot 4. Next, as time passes and new prices develop a pivot at 4, start at pivot 2 and draw a line bisecting 3 and 4. You will see that this dash line is steeper down than the up?slope of 1-4. So this is like a vector diagram of forces showing the trend will be steadily down along the dash line until medians point upward again. So continue to draw these lines so you may get in near the bottom.
Similarly in a rising market, you will notice that the fastest gains are always made when bisectors from higher and lower pivots point in the same direction.
This method is superior to the Moving Average Method of recognising Trends in that there is less “whip saw”, and closer positions to the bottoms and top pivots are possible. One reason for this is that there is a probability that when prices do pass through the bisecting lines, they will return to it before continued movement in the newly indicated direction. (Rule #7 – Penetration Rule) |
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| Chart Notes-Andrews wrote "This is a very important principle, so make sure you understand it!" |
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