As the area of accumulation progresses, the Composite Operator continues to buy shares at the bottom of the trading range, and sells some of his holdings at the top of the trading range for the purpose of pushing prices back down in order to accumulate them at the best possible price. During this time, the public may also buy. This poses a problem for the Composite Operator. If the public is allowed to buy, they may sell prematurely for a short quick profit as the price is moved out of the trading range. This could cause a hesitation in the price markup, or worse, force the price back down into the trading range. Moreover, some people in the trading range are shorting the stock. The Composite Operator would love nothing better than to trap these short sellers in during a quick mark-up, and force them to close their positions (buy) during his mark-up, adding full to the Composite Operator's Operation. So, the problem for the Composite Operator is to get rid of these weak holders, without losing control of his position, before he moves the stock up. The Composite Operator can use this shakeout technique several times, either during the accumulation process or during an uptrend. These are know as ordinary shakeouts. If however, he is finished with his accumulation and wants to shake the public out so that he can move the stock up out of the trading range, this is know as a Terminal Shakeout. A Terminal Shakeout occurs at the end of a period of accumulation.

If you look back through the trading range, you will see that the early parts of the trading range were probable a little difficult to analyze. But as time goes on, the picture becomes more and more positive, with higher bottoms, and higher tops within the trading range. Also, volume is increasing on the rallies within the trading range and noticeably contracting on the reactions. When the Compositor Operator has all the shares he wants and is now ready to get rid of the weak holders. he quickly throws over some of his stock forcing the price down, often several points through the bottom of the trading range. This price movement is a sharp reaction on increased spread and volume. The shorts are licking their chops. The weak longs are scared that it's a #1 Spring and they sell. The important thing to analyze is how much supply comes out on the shakeout and on the penetration of the trading range, and how well the Composite Operator is able to absorb these shares. The Composite Operator snaps up these cheap shares and keeps buying in an effort to lock in the shorts. He moves the price up aggressively. The shorts realize that they have been had and start to close out their positions (buy), adding more fuel to the aggressive move up.

The difference between a Terminal Shakeout and an Ordinary Shakeout is that a Terminal Shakeout occurs a the end of an area of accumulation. An ordinary shakeout occurs anywhere in an are of accmulation or defined upternd.