Condensed case — Short version of the Chapter 4 test bench. For original figures, state tables, and edge-band vs mid-band comparison → full encyclopedia entry.
Source: Hurst (1970), Ch. 4 — Use This Example as Your Channel Prediction Guide. Real name: Gruen Industries, masked as «Z Corp» until the forecast.
Context
Hurst gives the reader only weekly highs and lows of an unnamed stock: no fundamentals, no news. The bare chart does not answer «buy now?». The experiment measures how much curvilinear envelopes add over conventional charting.
First envelope: ~6-week component (7 valid samples, one 3-week discarded); short trend still down ~3 weeks — do not buy. Second envelope: 19-week cycle; the outer channel centre line has rounded a low and points up; the 19-week cycle is at ~16 weeks → low in ~3 weeks, together with the 6-week cycle.
Setup
Card — Forecast (Fig. IV-4)
- Action: buy, do not short.
- Entry: in ~3 weeks, around 7¼–7½ (projected outer channel lower band).
- Target: rise toward ~11¼ in 8–10 weeks (+55%, ≈330%/year).
- Cyclic context: L-4 low 19 weeks from the first; autumn high past halfway up the outer channel rise.
Only after the forecast does Hurst reveal the name — Gruen Industries — inviting a fundamentals check during the wait, if desired.
Sequence
- Wait — ~3 weeks until the 7¼–7½ zone; no short while the short trend is still down.
- Entry — buy at 7¼ in the third forecast week.
- Weekly update — premature upside break of the inner envelope, then the outer: signal it is «too early for a 19-week cycle top»; target raised to ~12.
- Initial target — ~11¼ zone reached in 4 weeks instead of the 8–10 forecast.
- Exit / management — envelopes updated weekly guide holding beyond the original target.
Outcome / Lesson
| Outcome | Value |
|---|---|
| Net performance | +62% in 8 weeks |
| Compound equivalent | ≈2,313%/year |
| Time/amplitude accuracy | «Very close to being correct» over 5 months |
Lesson — The point is not the 62%: every conclusion came without knowing the stock. The forecast was an estimate with windows, updated every bar — and its best contribution was correcting upward in progress.
Full encyclopedia entry
Case Gruen Industries (1961) — Figs. IV-1/IV-5, edge-band vs mid-band, valid trend line.
Links: Graphic buy timing · Case studies index