Hi AllPlease note the chart below (sorry if its not that...

Hi All

Please note the chart below (sorry if its not that clear):

I have deleted all price data so that you can get a sense of trend development when you eliminate the usual fluctuations associated with daily price movement.

What we like to see on this chart is a continuous spreading of the Longer Term EMA's (red lines. The yellow line is a 50EMA). When the above takes place it says the that trend is up and one should be long - nothing more and nothing less. When the lines begin fanning/opening out it basically stipulates that "investors" or the smart money are taking a a medium to longer term and thus positioning themselves that way.

The Shorter Term group (the purple lines), like mentioned earlier, is the erratic short term traders. Lots of volatility will make these shorter term EMA's more susceptible to change as you can see.

Ideally, you want a nice gap between both the short and long term bunch like you see back in May/June. When this happens its telling you that the short term traders/investors are towing the line and that the longer term group (the Red's) are happily to move in sync, albeit at a slower gradual pace proving nice support along the way.

It also give the stock some wiggle room for any reasonably priced correction.

Its the Reds that are important and provide the ideal equilibrium between the short term gunslingers and the more longer term trend follower.

In most cases, in a trending market (up or down),the Red's (longer, smoother averages)provide a good sense of support, which is what we are seeing now.

I hope this helps clarify my earlier post. Without the price data on the chart (as the above chart shows),one gets a clearer understanding of the character and sentiment of the security in question.

Cheers
Babylon

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