Big Charts Graph

In this example we use data available on the service www.bigcharts.com.

Go to that site and select GE and Interactive Charts with the following parameters:

• Time frame - 3 months (click on white window for selection)
• Frequency - daily
• Moving average - SMA (2-Line) using 6 as the number of periods
• Lower Indicator - Volume Accumulation.

When volume accumulation is positive, buyers are in the market. When it is negative, sellers are in the market. Usually when there are buyers, the stock price will rise. Selecting "chart help" just under the graph in BigCharts will give additional information about the indicators.

Now, look at the graph for GE in early October. VA was positive and the price was dropping! This is an uncommon event and almost always precedes a rise in price.

The reasoning is that smart money is carefully accumulating the stock while the rest of us are selling.

Notice that this was a very early indicator of the subsequent rise in price. This pattern is called a divergence. When it occurs get ready to make some money.

Note also the action of the MA signals. The fast MA crossed the slow MA in mid-October, which is also a signal for a rise in price, but not nearly as effective.

This is another excellent example of what we mean by "Dynamic Investing".

Opportunities like this occur infrequently for any particular stock, but it should be clear that watching this kind of medium term price movement can be highly profitable.