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By the Edito s of 
Investor's Busine s Daily
© 1997, Investor's Business Daily, Inc. 
ALL RIGHTS RESERVED.  No part of this publication may be 
reproduced, stored in a retrieval system, or transmitted by any 
means, electronic, mechanical, photocopying, recording, or oth 
erwise, without the prior written permission of the publisher 
and the copyright holder. 
This publication is designed to provide accurate and authorita 
tive information in regard to the subject matter covered. It is 
sold with the understanding that the publisher is not engaged 
in rendering legal, accounding or other professional service. 
Cover design by Steve Hodowsky 
Printed in the United States of America 
by 
O'Neil Data Systems, Inc. 
12655 Beatrice Street 
Los Angeles, California 90066-7003 
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Contents 
Preface  v 
I. General Market In  icators 
Market Indexes  3 
Moving Averages  7 
Advance-Decline Lines  13 
Boldfacing In Stock Tables  17 
Ticker Tape Reading  19 
Ticker Tape Study  23 
World Stock Markets  25 
II. Psychological Marke  Indicators 
Bearish/Bullish Sentiment  29 
Odd-Lot Short Sales  33 
Public/NYSE Specialist Short Sales  35 
Short Interest Ratio  37 
Mutual Fund Buys, Redemptions  40 
OTC Vs. NYSE Trading Volume  43 
Stock Splits  46 
New Issue Activity  48 
Valuing The Dow  51 
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Ill. Stock Analysis 
Earnings Per Share Rank  55 
Relative Strength  58 
Accumulation-Distribution Rating  61 
Volume Percent Change  64 
Stock Moving Averages  67 
'Stocks In The News' Charts  70 
Investor's Weekend Review  76 
Stochastic Oscillators  79 
IV. Investment Strategy 
Valuing Growth Stocks  85 
Industry Prices  89 
Earnings Season  91 
Earnings Reports  93 
Largest % Increase In Volume  97 
Price-Earnings Ratios  99 
Forward-Looking P-Es  103 
Timing Transactions  107 
Good Publicity  Ill 
V. Mutual Funds 
Mutual Fund Snapshots  117 
Mutual Fund Cash Position  120 
Index  123 
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Preface 
When asked what Investor's Busine s Daily has that other 
newspapers don't, I often have to sto  and think. It's not that 
examples don't readily come to min  . It's that there are so 
many I don't know where to begin.  o, I often find myself 
answering: "How much time do I have?" 
On such occasions I'm also reminde  how formidable a task 
it is for readers to understand all that's ·n the paper and how to 
use it to their advantage. Over the yea s, we've produced vari 
ous pamphlets, tapes and books to  elp with the learning 
process. But the questions keep coming 
In the paper itself, we've run two s  ries of explanatory fea 
tures-one in 1987-88 called "Inside l  vestor's Daily" and the 
other in 1989-90 called "Educating In  estors" (a feature we 
resumed in late 1992). We got a lot of p  sitive feedback on both 
series, and many readers have asked fo  reprints. 
This book is a compilation of many a tides from those series. 
We've made a special effort to include a tides on those features 
in the paper that generate the most qu stions, such as how to 
interpret the "Psychological Market In  icators" on the General 
Market Indicators page. 
Most of the articles were written by Leo Fasciocco, dean of 
U.S. stock-market writers, who also wri es our daily "Inside the 
Market" column on NYSE action. Exam  les used in his original 
stories have been updated where nece sary. The charts are by 
Alan Hoffman, our graphics editor. 
We hope these articles-many of whi  h include insights from 
v
America's top market analysts and money managers-will help 
make Investor's Business Daily even more useful to our already 
loyal readers. 
If there is other information you need, or improvements you 
would like to see in Investor's Business Daily, please let us know. 
We get thousands of suggestions each year. All are given seri 
ous consideration, and many find their way into the paper or 
our other products. 
Wesley F Mann 
Editor 
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Fingers On The Puts  Of The Broad Market 
•  Knowing if you're in a  In the world of stock market inves ing, a lot of cliches get 
bull market or a bear  tossed around. Among the classics: "  on't fight the tape" and 
"the trend is your friend." 
market solves half 
As with most cliches, these one-lin  rs contain more than a 
the problem in 
shred of truth, especially when it c  mes to market activity. 
selecting stocks.  Experienced investors have come t  know that the general 
trend of the overall market has a majo  influence on the perfor 
mance of individual issues. 
Knowing if you're in a bull market (r sing prices) or bear mar 
ket (declining prices), or even a chop  y market (sideways pat 
tern with volatility), solves half the pr blem in selecting stocks. 
Many experts believe that proper analysis of the market's 
trend is 60% of the process of selectin  winning stocks. 
Because most investors buy long, as opposed to selling short, 
it's important to be aware of the differ  nee between market cor 
rections-5% to 10% declines in an o herwise rising long-term 
trend-and dreaded bear markets. 
It's been said that in a bear mark t at least three of four 
stocks will fall. Another cliche is appr  priate here: "When they 
raid the house, they get them all." 
Analyzing The Market 
There are many ways to analyze th  stock market. Investor's 
Business Daily doesn't promote any particular method. But 
knowing the importance of market dat  , the newspaper has pro 
vided its readers with a wealth of info mation and an attractive 
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