The Darvas Method

[S Chun-Li]

One more thing I should mention.

The box measuring system I just described with example is only valid, in Darvas's view, for stocks breaking out above yearly highs.

If you want to measure boxes in a declining stock, then I guess the appropriate similar system would be to apply it to stocks making new yearly lows, and adjust the algorithm to find the bottom of the box first by looking for a low not beaten for 3 days, then find the top by going back three days from the setting of the bottom, and looking for a high not beaten for 3 days.

Zeev's system seems to be more flexible and useful in that

1) boxes do not require the setting of new yearly highs or lows
2) the top/bottom of one box becomes the bottom/top of the next box up/down
3) the limits of the box are influenced by where the box limits were last time the stock was trading around the area of the current box, if that was recent. In other words, if a stock breaks up into a new box and then comes back down past the breakout point, it is then considered to be back in thte old box, rather than having to wait to define where the current box is.
4) Zeev uses intraday charts to form boxes, rather than just daily
5) Zeev's boxes don't have to be horizontal, they can be part of a sloping channel

I will let Zeev know about this discussion so he can comment on or correct my impressions above, if he feels so inclined.