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Jesse Livermores original notes for his secret market keyExplanatory Rules (1) Record prices in Upward Trend Column in black ink. (2) Record prices in Downward Trend column in red ink. (3) Record prices in the other four columns in pencil. (4) (a) Draw red [black and dashed] lines under your last recorded price in the Upward Trend column the first day you start to record figures in the Natural Reaction column. You begin to do this on the first reaction of approximately six points from the last price recorded in the Upward Trend column. (b) Draw red [black and dashed] lines under your last recorded price in the Natural Reaction column the first day you start to record figures in the Natural Rally column or in the Upward Trend column. You begin to do this on the first rally of approximately six points from the last price recorded in the Natural Reaction column. You now have two Pivotal Points to watch, and depending on how prices are recorded when the market returns to around one of those points, you will then be able to form an opinion as to whether the positive trend is going to be resumed in earnestor whether the movement has ended. (c) Draw black lines under your last recorded price in the Downward Trend column the first day you start to record figures in the Natural Rally column. You begin to do this on the first rally of approximately six points from the last price recorded in the Downward Trend column. (d) Draw black lines under your last recorded price in the Natural Rally column the first day you start to record figures in the Natural Reaction column or in the Downward Trend column. You begin to do this on the first reaction of approximately six points from the last price recorded in the Natural Rally column. (5) (a) When recording in the Natural Rally column and a price is reached that is three or more points above the last price recorded in the Natural Rally column (with black lines underneath), then that price should be entered in black ink [and circled] in the Upward Trend column. (b) When recording in the Natural Reaction column and a price is reached that is three or more points below the last price recorded in the Natural Reaction column (with red [black and dashed] lines underneath), then that price should be entered in red ink [black and boxed] in the Downward Trend column. (6) (a) When a reaction occurs to an extent of approximately six points, after you have been recording prices in the Upward Trend column, you then start to record those prices in the Natural Reaction column, and continue to do so every day thereafter that the stock sells at a price which is lower than the last recorded price in the Natural Reaction column. (b) When a reaction occurs to an extent of approximately six points, after you have been recording prices in the Natural Rally column, you then start to record those prices in the Natural Reaction column, and continue to do so every day thereafter that the stock sells at a price which is lower than the last recorded price in the Natural Reaction column. In case a price is made which is lower than the last recorded price in the Downward Trend column, you would then record that price in the Downward Trend column. (c) When a rally occurs to an extent of approximately six points, after you have been recording prices in the Downward Trend column, you then start to record those prices in the Natural Rally column, and continue to do so every day thereafter that the stock sells at a price which is higher than the last recorded price in the Natural Rally column. (d) When a rally occurs to an extent of approximately six points, after you have been recording prices in the Natural Reaction column, you then start to record those prices in the Natural Rally column, and continue to do so every day thereafter that the stock sells at a price which is higher than the last recorded price in the Natural Rally column. In case a price is made which is higher than the last recorded price in the Upward Trend column, you would then record that price in the Upward Trend column. (e) When you start to record figures in the Natural Reaction column and a price is reached that is lower than the last recorded figure in the Downward Trend column then that price should be entered in red ink [black and boxed] in the Downward Trend column. (f) The same rule applies when you are recording figures in the Natural Rally column and a price is reached that is higher than the last price recorded in the Upward Trend columnthen you would cease recording in the Natural Rally column and record that price in black ink [and circled] in the Upward Trend column. (g) In case you had been recording in the Natural Reaction column and a rally should occur of approximately six points from the last recorded figure in the Natural Reaction columnbut that price did not exceed the last price recorded in the Natural Rally columnthat price should be recorded in the Secondary Rally column and should continue to be so recorded until a price had been made which exceeded the last figure recorded in the Natural Rally column. When that occurs, you should commence to record prices in the Natural Rally column once again. (h) In case you have been recording in the Natural Rally column and a reaction should occur of approximately six points, but the price reached on that reaction was not lower than the last recorded figure in your Natural Reaction column that price should be entered in your Secondary Reaction column, and you should continue to record prices in that column until a price was made that was lower than the last price recorded in the Natural Reaction column. When that occurs, you should commence to record prices in the Natural Reaction column once again. (7) The same rules apply when recording the Key Priceexcept that you use twelve points as a basis instead of six points used in individual stocks. (8) The last price recorded in the Downward or Upward Trend columns becomes a Pivotal Point as soon as you begin to record prices in the Natural Rally or Natural Reaction columns. After a rally or reaction has ended you start to record again in the reverse column, and the extreme price made in the previous column then becomes another Pivotal Point. It is after two Pivotal Points have been reached that these records become of great value to you in helping you anticipate correctly the next movement of importance. These Pivotal Points are drawn to your attention by having a double line drawn underneath them in either red [black and dashed] ink or black ink. Those lines are drawn for the express purpose of keeping those points before you, and should be watched very carefully whenever prices are made and recorded near or at one of those points. Your decision to act will then depend on how prices are recorded from then on. (9) (a) When you see black lines drawn below the last recorded red-ink figure [black and boxed] in the Downward Trend column you may be given a signal to buy near that point. (b) When black lines are drawn below a price recorded in the Natural Rally column, and if the stock on its next rally reaches a point near that Pivotal Point price, that is the time you are going to find out whether the market is strong enough definitely to change its course into the Upward Trend column. (c) The reverse holds true when you see red [black and dashed] lines drawn under the last price recorded in the Upward Trend column, and when red [black and dashed] lines are drawn below the last price recorded in the Natural Reaction column. (10) (a) This whole method is designed to enable one to see clearly whether a stock is acting the way it ought to, after its first Natural Rally or Reaction has occurred. If the movement is going to be resumed in a positive mannereither up or downit will carry through its previous Pivotal Pointin individual stocks by three points or, in the Key Price by six points. (b) If the stock fails to do this and in a reaction sells three points or more below the last Pivotal Point (recorded in the Upward Trend column with red [black and dashed] lines drawn underneath), it would indicate that the Upward Trend in the stock is over. (c) Applying the rule to the Downward Trend: Whenever, after a Natural Rally has ended, new prices are being recorded in the Downward Trend column, these new prices must extend three or more points below the last Pivotal Point (with black lines underneath), if the Downward Trend is to be positively resumed. (d) If the stock fails to do this, and on a rally sells three or more points above the last Pivotal Point (recorded in the Downward Trend column with black lines drawn underneath), it would indicate that the Downward Trend in the stock is over. (e) When recording in the Natural Rally column, if the rally ends a short distance below the last Pivotal Point in the Upward Trend column (with red [black and dashed] lines underneath), and the stock reacts three or more points from that price, it is a danger signal, which would indicate the Upward Trend in that stock is over. (f) When recording in the Natural Reaction column, if the reaction ends a short distance above the last Pivotal Point in the Downward Trend column (with black lines underneath), and the stock rallies three or more points from that price, it is a danger signal, which would indicate the Downward Trend in that stock is over. On the following pages, on the lefthand side, are Jesse Livermores original notes for his secret market key. On April 2nd prices began to be recorded in Natural Rally column. Refer to Explanatory Rule 6-B. Draw black line under last price in Downward Trend column. Refer to Explanatory Rule 4-C. On April 28th, prices began to be recorded in Natural Reaction column. Refer to Explanatory Rule 4-D. All of these prices recorded are brought forth from the preceding page in order to keep the Pivotal Points always before you. During the period from May 5th to May 21st inclusive, no prices were recorded because no prices were made lower than the last price recorded in the Natural Reaction column. Nor was there sufficient rally to be recorded. On May 27th, the price of Bethlehem Steel was recorded in red [black and boxed] because it was a lower price than the previous price recorded in the Downward Trend column. Refer to Explanatory Rule 6-C. On June 2nd, Bethlehem Steel became a buy at 43. Refer to Explanatory Rule 10-C and D. On the same day U.S. Steel became a buy at 42 1/4. Refer to Explanatory Rule 10-F. On June 10th, a price was recorded in the Secondary Rally column of Bethlehem Steel. Refer to Explanatory Rule 6-E. On June 20th, the price of U.S. Steel was recorded in the Secondary Rally column. Refer to Explanatory Rule 6-G. On June 24th, prices of U.S. Steel and Bethlehem Steel were recorded in black ink [and circled] in the Upward Trend column. Refer to Explanatory Rule 5-A. On July 11th, prices of U.S. Steel and Bethlehem Steel were recorded in the Natural Reaction column. Refer to Explanatory Rules 6-A and 4-A. On July 19th, prices of U.S. Steel and Bethlehem Steel were recorded in the Upward Trend column in black ink [and circled] because those prices were higher than the last prices that were recorded in those columns. Refer to Explanatory Rule 4-B. On August 12th, the price of U.S. Steel was recorded in the Secondary Reaction column because the price was not lower than the last price previously recorded in the Natural Reaction column. On the same day the price of Bethlehem Steel was recorded in the Natural Reaction column because that price was lower than the last price previously recorded in the Natural Reaction column. On August 24th, prices of U.S. Steel and Bethlehem Steel were recorded in the Natural Rally column. Refer to Explanatory Rule 6-D. On August 29th, prices of U.S. Steel and Bethlehem Steel were recorded in the Secondary Reaction column. Refer to Explanatory Rule 6-H. On September 14th, the price of U.S. Steel was recorded in the Downward Trend column. Refer to Explanatory Rule 5-B. On the same day a price was recorded in the Natural Reaction column of Bethlehem Steel. That price was still being recorded in the Natural Reaction column because it had not reached a price that was 3 points lower than its previous price with red [black and dashed] lines drawn. On September 20th, prices of U.S. Steel and Bethlehem Steel were recorded in the Natural Rally column. Refer to Explanatory Rule 6-C for U.S. Steel and 6-D for Bethlehem Steel. On September 24th, the price of U.S. Steel was recorded in the Downward Trend column in red ink [black and boxed], being a new price in that column. On September 29th, prices of U.S. Steel and Bethlehem Steel were recorded in the Secondary Rally column. Refer to Explanatory Rule 6-G. On October 5th, the price of U.S. Steel was recorded in the Upward Trend column in black ink [and circled]. Refer to Explanatory Rule 5-A. On October 8th, the price of Bethlehem Steel was recorded in the Upward Trend column in black ink [and circled]. Refer to Explanatory Rule 6-D. On November 18th, prices of U.S. Steel and Bethlehem Steel were recorded in the Natural Reaction column. Refer to Explanatory Rule 6-A. On December 14th, prices of U.S. Steel and Bethlehem Steel were recorded in the Natural Rally column. Refer to Explanatory Rule 6-D. On December 28th, the price of Bethlehem Steel was recorded in the Upward Trend column in black ink [and circled], being a price higher than the last price previously recorded in that column. On January 4th, the next trend of the market was being indicated according to the Livermore method. Refer to Explanatory Rules 10-A and B. On January 12th, prices of U.S. Steel and Bethlehem Steel were recorded in the Secondary Reaction column. Refer to Explanatory Rule 6-H. On January 23rd, prices of U.S. Steel and Bethlehem Steel were recorded in the Downward Trend column. Refer to Explanatory Rule 5-B. On January 31st, prices of U.S. Steel and Bethlehem Steel were recorded in the Natural Rally column. Refer to Explanatory Rules 6-C and 4-C. On March 16th, prices of U.S. Steel and Bethlehem Steel were recorded in the Natural Reaction column. Refer to Explanatory Rule 6-B. On March 30th, the price of U.S. Steel was recorded in the Downward Trend column, being a lower price than was previously recorded in the Downward Trend column. On March 31st, the price of Bethlehem Steel was recorded in the Downward Trend column, being a lower price than was previously recorded in the Downward Trend column. On April 15th, prices of U.S. Steel and Bethlehem Steel were recorded in the Natural Rally column. Refer to Explanatory Rule 6-C. On May 17th, prices of U.S. Steel and Bethlehem Steel were recorded in the Natural Reaction column, and the next day, May 18th, the price of U.S. Steel was recorded in the Downward Trend column. Refer to Explanatory Rule 6D. The next day, May 19th, a black line was drawn under the Downward Trend column in Bethlehem Steel, meaning a price was made that was the same as the last price recorded in the Downward Trend column. On May 25th, prices of U.S. Steel and Bethlehem Steel were recorded in the Secondary Rally column. Refer to Explanatory Rule 6-C. On June 16th, the price of Bethlehem Steel was recorded in the Natural Reaction column. Refer to Explanatory Rule 6-B. On June 28th, the price of U.S. Steel was recorded in the Natural Reaction column. Refer to Explanatory Rule 6-B. On June 29th, the price of Bethlehem Steel was recorded in the Down ward Trend column, being a price lower than the last price recorded in the Downward Trend column. On July 13th, prices of U.S. Steel and Bethlehem Steel were recorded in the Secondary Rally column. Refer to Explanatory Rule 6-G. On July 21st, the price of Bethlehem Steel was recorded in the Upward Trend column, and the next day, July 22nd, the price of U.S. Steel was recorded in the Upward Trend column. Refer to Explanatory Rule 5-A. On August 4th, prices of U.S. Steel and Bethlehem Steel were recorded in the Natural Reaction column. Refer to Explanatory Rule 4-A. On August 23rd, the price of U.S. Steel was recorded in the Downward Trend column, being lower than the price previously recorded in the Downward Trend column. On August 29th, prices of U.S. Steel and Bethlehem Steel were recorded in the Natural Rally column. Refer to Explanatory Rule 6-D. On September 2nd, prices of U.S. Steel and Bethlehem Steel were recorded in the Upward Trend column, being higher prices than the last prices previously recorded in the Upward Trend column. On September 14th, prices of U.S. Steel and Bethlehem Steel were recorded in the Natural Reaction column. Refer to Explanatory Rules 6-A and 4-A. On September 19th, prices of U.S. Steel and Bethlehem Steel were recorded in the Natural Rally column. Refer to Explanatory Rules 6-D and 4-B. On September 28th, prices for U.S. Steel and Bethlehem Steel were recorded in the Secondary Reaction column. Refer to Explanatory Rule 6-H. On October 6th, prices of U.S. Steel and Bethlehem Steel were recorded in the Secondary Rally column. Refer to Explanatory Rule 6-G. On November 3rd, the price of U.S. Steel was recorded in the Secondary Reaction column, being a price lower than the last previous price recorded in that column. On November 9th, a dash was made in the Natural Reaction column of U.S. Steel, being the same price that was last recorded in the Natural Reaction column, and on the same day a new price was recorded in the Natural Reaction column of Bethlehem Steel, being a lower price than the last price previously recorded in that column. On November 24th, the price of U.S. Steel was recorded in the Downward Trend column. Refer to Explanatory Rule 6-E, and the next day, November 25th, the price of Bethlehem Steel was recorded in the Downward Trend column. Refer to Explanatory Rule 6-E. On December 7th, the prices of U.S. Steel and Bethlehem Steel were recorded in the Natural Rally column. Refer to Explanatory Rule 6-C. On January 9th, prices of U.S. Steel and Bethlehem Steel were recorded in the Natural Reaction column. Refer to Explanatory Rule 6-B. On January 11th, prices of U.S. Steel and Bethlehem Steel were recorded in the Downward Trend column, being lower than the last recorded prices in the Downward Trend columns. On February 7th, prices are recorded in the Natural Rally column of Bethlehem Steel, this being the first day it rallied the required distance of six points. The following day U.S. Steel is recorded in addition to Bethlehem Steel and the Key Price, the latter having rallied the proper distance to be used in recording. |
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