Chrysler was my first big winner back in 1962. It was a classic cup with handle. The Dow had a terrible break in early '62 caused by the government announcing the first investigation of the mutual fund industry since the Depression.
Along the bottom of the Chrysler cup, note how big-volume buying showed up almost every other week when the stock closed up.
Later, it was known the Love brothers were accumulating a big position.
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The volume picked up significantly as it advanced six weeks off the bottom. I bought a little at that time but sold as it corrected to create the handle area.
During this time, a U.S. spy plane had taken pictures of Soviet missile bases under construction in Cuba. That created a confrontation where Soviet ships loaded with missiles were to meet a U.S. Navy blockade.
Fear of a possible World War III affected the market and caused a shakeout in the Chrysler handle, which closed almost unchanged for the week (support).
Once an agreement was made and the Soviet ships turned back, the market had a follow-through day.
Chrysler broke out at $58.50, the pivot-point price at that time (chart is adjusted for two 2-for-1 splits), which is where I bought.
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A few weeks later Jerry Tsai of Fidelity told me he had bought Chrysler at that same time. He said he liked to buy when there's a lot of volume.
When I mentioned later to Gerald Loeb, author of "The Battle for Investment Survival," that I had bought Chrysler, he said he also bought at that same point. It's nice to know you're buying with good company.
Chrysler had hired a well-known new designer and they had new models. It was a turnaround with two quarters of strong earnings.
So the next time you find a classic cup with handle with signs of big volume accumulation, good earnings, with a breakout on huge volume on a new market follow-through, recognize that it's probably not the public buying.
Editor's Note: O'Neil founded Investor's Business Daily in 1984. This story was first published on Jan. 2, 2013. Chrysler now trades as Stellantis following a 2021 merger of the Italy-U.S. conglomerate Fiat Chrysler, owner of the Chrysler, Fiat, Maserati, Dodge, Jeep and Ram brands with France's PSA Group, which owns the German auto brand Opel and French car giants Citroen and Peugeot.
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