Tape Reading and Market Tactics

In this 1931 Wall Street classic, author and noted economist Humphrey B. Neill explainsin Tape Reading and Market Tactics not only how to read the tape, but also how to figure out what’s going on behind the numbers.

Introduction:

Market-action – the buying and selling of stocks -is recorded on the tape. To the uninitiated eye and brain the tape means little – it is si.qiply a confusion of hieroglyphics and figures. To the student, however, it offers opportunities commensurate with the skill, judgment, study, and self-mastery employed. As the tape records money-transactions, I am going to ask you to forget, for the time, the word “points,, when discussing stock quotations and think instead in terms of dollars. The mention of dollars immediately conjures up the idea of buying and selling.

For instance, if you notice a 5,000-share transaction of Steel (symbol, X) on the tape at $170, call to your mind the fact that this means that $850,000 worth of common-stock certificates of the United States Steel Corporation have changed hands. If you then notice, some hours later, another exchange of the same quantity at $175, realize that this, translated, means an increase in value of $25,000.

To me such transactions take on a far greater significance if spoken of in terms of dollars than they would if someone said: ” Steel advanced five points.” Before we attempt to understand the technicalities of tape reading, let us picture in our minds the scene behind the symbols. If you have never visited the New York Stock Exchange, I suggest you do so at your first opportunity. In the mean time, visualize a market-place where hundreds of men are busily engaged in buying and selling goods. You see a little knot here in this corner where one man in the center has orders from his clients to buy, we will say, 1,ooo shares of American Can stock at $150 per share-an order totalling a value of $150,000; quite a sizable piece of business. The other men in the group may each have smaller orders to sell: one is willing to sell 300 shares; another, 200; and so on.

Contents:

PART ONE: STOCK SPECULATION

PART TWO: TAPE READING

• The Ticker Tape
• The Principles of Tape Reading
• Increasing Volume During an Advance
• Turning-Points on Heavy Volume
• Turning-Points on Light Volume
• Various Types of Top-Action
• The Tape Story of Loew’s
• Steel, The Market Leader
• Tips are Dangerous
• Some Important Observations on Volume
• The Effect of News on Market-Action
• Resistances
• Suggestions to Speculators
• The Rise and Fall of Steel During a Normal Bull Movement

Tape Reading and Market Tactics By Humphrey Bancroft Neill PDF