Dancing With Growth Stock Prices

by David Jenyns on January 5, 2009

To begin, Darvas dealt only in stocks which were “in tune with the jet age,” growth stocks. If a stock should move up to a higher box and stay there, he would buy it. For instance, if a stock had fluctuated in a 55 to 60 range, that would be its first box. If the stock should demonstrate its ability of staying in that box, he would buy it, and place a stop-loss order to sell a few points below the buying price.

If the stock should rise, he would raise the stop-loss price. It is “fundamentalism” only in the sense that he used a daily market average of industrial stocks as a basic indicator of the stock market trend. The price of the stock itself may then serve as a stimulant for buying or selling.

“Increased price and volume are the only confirmation that matter,” says Darvis.

People who are not familiar with market behavior may not like the idea of buying a stock with its price already up a bit. In abnormal market conditions, as when information turns out to be rumor, an obscure stock could mean crisis.

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