Stock prices tend to move in trends. A stock price moving ever higher is in an uptrend (Figure 14-1). Stocks moving relentlessly lower are in downtrends (Figure 14-2). Stocks moving in a directionless pattern are in consolidation, or no trend.
Figure 14-1. Apollo Group with 200 day simple moving average. As of April 2002,Apollo had been in an uptrend for more than two years. (MSN Money chart.)
Figure 14-2. ADC Telecommunications with its 200-day simple moving average. ADC reversed its uptrend and started down in mid-2000. (MSN Money chart.)
Stocks in uptrends don’t move up in price every ...