Page 211 - THE MARKET WHISPERER

THE MARKET WHISPERER 20 7

remember that the explanation in reverse is valid for a down trending
stock.

• Rule 1: A stock’s ride above the MA indicates a continuing trend. A drop
beneath the MA signals the trend’s end.

Daily Chart Trend Development for Akamai, AKAM

In March, Akamai leaves a long period of moving sideways and begins
to rise [1]. Notice how the stock “rides” the 20MA. In some cases, you can
see the stock drop beneath the 20MA line, but these are all intraday lows
which began and ended in the same trading day. The first suspicion of a
trend change occurs towards the high when it breaks the 20MA, but finds
support in the 50MA. Eventually it breaks down [2] and abandons the
uptrend.

What You Should be Anticipating

First and foremost, you should expect an up trending stock to ride the
20MA exactly as Akamai does over several months, starting at [1] and
up until the breakdown of the moving average. Riding above the 20MA is
considered a classic uptrend.

The 20MA line is therefore the line of support. When I look for an
entry point on a stock trending up, I need to find it as the stock is close