Condensed case — The full Hurst method on one real stock: scan, screening, envelope, inverse, nest of lows, VTL, half-span, trailing. For Figs. VIII-2/VIII-5 and full chronology → encyclopedia entry.
Source: Hurst (1970), Ch. 8 — A Model Transaction. Screw and Bolt Corporation (NYSE), 1 November 1968 – 2 January 1969.
Context
Market state on 1 November 1968: ~one-month long window. Weekly scan isolates Screw and Bolt among ~20 candidates: 15 months between 8 and 14, breakout to 18 in late September, five-week pullback; pronounced cyclicity; volume ~30,000/week. Ch. 7 screening: %/point above average, small cap (1.66M shares), B rating, P/E 20, cumulative earnings turning up (0.83 → 0.72).
Setup
Weekly envelope: dominant 18 weeks (samples 20 and 16); inside, 9.2 and 5.2 weeks; centre line hard up. 19-week inverse confirms. Duration projection → nest of lows within ~3 weeks. Daily adds 9.9-day component.
State table: «three up and two down» — but at the nest all five up together → buy imminent.
Card — Half-span before the order
- Critical price 17½ if the 10-week average turns at the nest.
- From ~14½ to 17½ in 5 weeks = half the move → target 20½.
- Potential ~6 points vs risk ~½ point + commissions — favourable odds.
- Trading cycle chosen: 18 weeks; VTL from the 9.2 component.
Sequence
| Date | Event |
|---|---|
| Fri 1 Nov | Full analysis; VTL 1 toward the nest |
| Mon 4 Nov | Short top → steeper VTL 2 |
| Wed 6 Nov | Open above VTL 2 → buy 15½; TLL-1 at 14⅛ |
| Fri 6 Dec | 10-week turns up → target zone 21–23 |
| 31 Dec | Blowoff to 24¾ — beyond zone and extrapolated envelope |
| 2 Jan 1969 | VTL 5 break → sold 23⅞ |
Result: +49.7% net in 57 days (318% simple annual). In very short term the same stock returned 1,168% annual in one day — but with dozens of other names to monitor.
Outcome / Lesson
The case integrates selection, analysis, logical sizing, and management: every book technique used once, at the right moment. The final blowoff (prices beyond zone, beyond envelope, cyclic time nearly exhausted) justifies very steep VTLs — not ordinary practice, but logical when three conditions align.
Lesson — Ch. 1 arithmetic: 318% in 57 days vs 1,168% in one day on the same ticker. Trading-interval choice = how many stocks to follow and how much compounding to practice.
Full encyclopedia entry
Case Screw and Bolt (1968) — day-by-day chronology, Figs. VIII-3/VIII-5.
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