7-06 Trendlines

You’re probably aware that trendlines are important to all of your research on potential purchases or sales of securities. Base numbers are equally important to understand the true meaning of any trends you identify. Depending on the type of chart you are viewing, you’ll also want to establish a solid, unbroken trendline of your own that graphically displays the unmistakable direction in which a stock (or stocks) is heading.


Notice the trend line in the chart above for the overall stock market was sloping upward, indicating a Bullish, or rising market.

Also, be sure to watch for changes in a trendline. They might be subtle. However, if you plot the trendline carefully, you’ll see that your line may take a slightly different direction. In the above chart, see how the long-term upward sloping trend-line was broken in 2008? That tells you when the trend is changing, or has already changed.

Mark's Tip

On most virtual accounts you can use the charts to draw your own trendlines by clicking the “Draw Trendlines” box at the bottom and then clicking on the chart to draw trend lines.