From any bottom, base or beginning point, two 45° angles can be started, one running up from the vertical angle and one running down from the vertical angle. You can also use a 45° angle or any other angle from any top, running the 45° angle down from the top. Which indicates a decline of 1 point per month, week or day, according to your scale of prices; then running the 45° angle up from the top, which would indicate a gain of 1 poiunt or 1 degree per month.
For example: take the low of U.S. Steel on november 13. 1929, when it sold at 150. Start the 45° angle up and it gains 1 point per month; then start the 45° angle down from 150 and the stock has to decline 1 point per month to rest on the angle of 45°.
November, 1930, was 12 months from novermber, 1929, and U.S. Steel made low in November, 1930 at 138, which was on a 45° angle from the bottm at 150.
In December, 1930, U.S. Steel made an extreme low of 134 3/8. This was 2 points under the 45° angle from 150, but rested on the angle of 2 x 1 from the low at 111 ½, made in January, 1927. In December , 1930, U.S. Steel closed above the 45° angle from the bottom of 150. As long as it stays above this angle, it is in a stronger position, but to regain the strongest position, it will have to cross the angles of 45° from 150 on the up side and stay above this angle.
Remember that when any stock breaks under the 45° angle on the daily, weekly or monthly puts it in a very weak position and indicates a decline to the next angle. However, when a stock can regain the 45° angle, it is in a stronger position. The same rule applies to a 45° angle up from any top. When a stock crosses the angle on the daily, weekly or monthly and stays above the 45° angle, it is in a very strong position.
After a stock once drops below or gets above any important angle and then reverses its position by getting back above the angle or dropping back below it, it changes the trend again.
The angles on the Monthly and Weekly charts are, of course, of greater importance than those on the Daily charts, because the daily trend can change quite often, while only the major changes are shown according to the angles on the monthly high and low and weekly high and low charts.
Always consider the distance a stock is from its base or beginning point when it breaks any important angle or crosses any important angle. The farther away from the base, the important the change in trend, whether this be crossing an angle from the top or breaking under an angle from the bottom.
Each stock works out its own square according to its extreme high and low points or the square of its tops. For example: U. S Rubber—143 was the total high to measure the width; then move over 143 spaces or 143 months to the angle of 90° down and divide up the square, as I have done on the monthly high and low chart. You can see how it worked out to the ¼ of its square, ½ , ¾, 1/3, 2/3 , etc. It will require 143 months to pass out of the square, or 11 years and 11 months. This period of time will end in December, 1931, which will be an important point to watch for a change in trend on U. S. Rubber.