At an investment conference in Las Vegas, I had the opportunity to introduce John Murphy, who wrote several books on technical analysis. He is often seen on TV commenting about the markets. John's message to the group of active traders was very simple. He showed the group two charts. One showed a stock trending higher. His message: Up is good. Then he showed a second chart, one of a stock trending lower. His message: Down is bad.

Obviously, John was taking the perspective of a bull. However, what he was pointing out was that investors should never forget the basics. He made his statement and illustrated its need by citing comments from some money managers on television who said they liked certain stocks because they were going down.

Many years ago, when I was working with William O'Neil, publisher of Investor's Business Daily. He would often point out the same basic idea when looking for good stocks. First, you want the stock's price to be in an up trend. Second, buy if it moves out from a base. The idea is that the up trend would appear to be resuming.

Subscribers to eSignal have at their finger tips new advanced charting capabilities. There is everything from bar charts to line charts to candlestick charts. There are even charts I have not heard of, such as Kagi and Renko. Many studies are available. They range from price momentum measures, such as the ADX rating system — which I use — to volume analysis via money flow and accumulation-distribution. Then, there are various Fibonacci and Gann indicators too. And, most impressively, there is a section to develop your own formulas.

These charts pack a lot of power. However, it can get confusing if one is not familiar with some of the indicators and their nuances. So, it would be a good idea for you to test an indicator and see how it works in helping you with your trading. I have back tested many indicators. I've bent them, twisted them and done everything I could to see if they would work well. In general, there are several basic things one should look for when studying a bar chart of a stock. They are:

1. The trend
2. Basing areas
3. Support and resistance points
4. Price and volume patterns

In mid-June of this year, the stock market was in a pronounced down trend. However, bucking the trend and showing unusual strength were the educational stocks. One of them was Corinthian Colleges Inc. (COC). A look at Corinthian's chart showed it in an up trend, fulfilling John Murphy's criterion for a good stock (for bulls). Corinthian had rallied during the first six months of the year, from $19 to almost $30, a gain of 50 percent. It was in an up trend.

The stock formed a based (moved sideways) in January between $19 and $21.20. It then pushed out of its base (broke out) and advanced to $24.80 by early March. Eventually, it reached a peak of $29.69 in late April. From that point, it formed a new base that lasted almost two months. The range of the base was between $26 and $29.50. The price area of $26 is called support because, every time Corinthian dropped back, it held in that area. Conversely, when the stock rallied, it ran into a wall (resistance) around $29.50.

Then, on June 21, 2002, it broke through the resistance with a move to $31 on a big expansion in volume. The eSignal chart depicted the breakout nicely with the colors on the chart displaying the price as green and volume as green. The eSignal charts show down days as red, both on price and volume. The color schemes can be adjusted. The trigger for Corinthian's breakout was the company's disclosure that online enrollment for students on the Internet for the fiscal year ending June 30 jumped 114 percent to 15,000 from 7,025 a year ago.

Corinthian, based near Los Angeles, operates 51 for-profit colleges. There are 16 in California and 9 in Florida. Some 20,000 students attend its schools. It has two facilities in San Jose, CA. Corinthian's annual revenues are running at $250 million. Net for the fiscal year ending June 30 should be up 40 percent and for fiscal 2003 approximately 25 percent. So, with the stock in an up trend and earnings strong, there are good prospects for the stock to move higher.

So, going to school on the stock market by using charts is a good way for eSignal subscribers to improve their investment grade. It can improve market timing for buying and selling.

Mr. Fasciocco’s articles appear on www.tickertapedigest.com. He is an independent contributing writer for several national publications. He is also president of Corona Investment Management. To get a free trial subscription to the Ticker Tape Digest Pro Report, which comes out daily on the web with midday updates, send an email message to freetrial@tickertapedigest.com. Mr. Fasciocco can be reached by email at leo@tickertapedigest.com.