A very important technical tool that savvy investors have learned to incorporate in their technical analysis is the 50-day moving average (DMA) line. The 50 DMA line plays a pivotal role relative to a stock's price. If the price of a stock is above its 50 DMA then odds are that its 50 DMA will act as formidable support. Conversely, if the price is below its 50 DMA then the moving average acts as resistance. Healthy stocks sometimes trade under their 50 DMA lines briefly, but usually a strong candidate will promptly bounce and repair a 50 DMA violation. When a stock has violated its 50 DMA line and then lingers beneath it, the stock's outlook gets worse and worse as it spends a greater period of time trading under that important short-term average line. Once the 50 DMA line starts sloping downward it should also be acknowledged that the stock has been struggling for a while, and it might be time to reduce exposure and look for places to put that money to work in stronger buy candidates.

Morningstar Inc. -$2.58 or -3.68% to $72.64) continued falling with a loss on below average volume as it sliced below its 50 DMA line on Monday. This is the first time the stock has violated its 50 DMA line since early July 2007. When the market is in a confirmed rally, unlike the present situation, any pullbacks to the 50 DMA line can offer investors another chance to accumulate shares within the proper guidelines. However, since the market is currently in a correction, and the 50 DMA line is violated, the investment system's M criteria argues that new buys are discouraged for now. This is because 3 out of 4 stocks go down during market corrections, which is not a conducive environment for investors to profit by owning stocks.

It would be encouraging for prompt institutional support to show up and repair its 50 DMA violation, however the latest weakness may be considered a technical signal prompting investors to take profits. Any additional damaging losses on heavier volume could raise more serious concerns. MORN was first featured at $64.52 in the September 2007 CANSLIM.net News with an annotated graph (read here) and has enjoyed a healthy rally since.

Volume is a vital component of technical analysis. Prudent investors that incorporate volume into their stock analysis have often benefited several fold. Ideally, healthy stocks will more often tend to rise on higher volume and pullback on lighter volume. Volume is a great proxy for institutional sponsorship. Conversely, high volume declines can be an ominous, as this usually signals distribution and further price deterioration are more likely to follow.

Morningstar Inc. (MORN +$5.01 or +7.75% to $69.68) surged to a fresh all-time high with a considerable gain backed by more than twice its average daily volume, triggering a technical buy signal. Bullish action in the early going helped it make it into today's CANSLIM.net Mid-Day Breakouts Report (read here) where it was noted, "Y - Considerable gain has it hitting a new all-time high with volume running at an above average pace. It may meet guidelines by the session's close to trigger a proper technical buy signal. As previously noted, 'Watch for a new proper technical buy signal to be triggered with convincing gains on at least +50% above average volume before initiating any new positions'.'' Shortly after the mid-day report was published MORN's volume surged above the threshold which triggered its latest technical buy signal. Recently it found support at its 50 DMA line, with volume mostly quieter than average for the past several weeks while basing. It was first featured at $64.52 in the September 2007 CANSLIM.net News with an annotated graph (read here).

Morningstar sports a very healthy Earnings Per Share (EPS) rating of 95 and an impressive Relative Strength (RS) rating of 93. MORN resides in the Commercial Services- market research group which is currently ranked 58th of out the 197 Industry Groups list. Strong leadership in the group to meet the L criteria includes several high-ranked stocks trading in close range of their 52-week highs right now including - IHS Inc. (IHS), Reuters (RTRSY), IntrDat (IDC), and ComScore (SCOR). The number of top-rated funds with an ownership interest has risen from 58 funds in September ‘06 to 63 funds as of June '07, a compelling sign of increasing institutional interest (the I criteria). The prior chart resistance in the $67 area now becomes the first area of key chart support to watch. The next important level is the stock's 50-day moving average (DMA) line (now $60.94). Disciplined investors know to avoid buying stocks above the maximum buy point, because doing so is considered "chasing" and typically hinders performance. As long as this breakout is not negated with a close back under prior high closes, odds favor even further gains.

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Morningstar Inc.	Kenneth J. Gruneisen
Ticker Symbol: MORN (NASDAQ)	Industry Group: Commercial Services- Market Research	Shares Outstanding: 43,200,000
Price: $64.52	Day's Volume: 103,400 8/31/2007	Shares in Float: 10,800,000
52 Week High: $67.16 8/31/2007	50-Day Average Volume: 169,400	Up/Down Volume Ratio: 1.3
Pivot Point: $67.16 8/8/2007 high	Pivot Point +5% = Max Buy Price: $70.52	Web Address: http://www.morningstar.com/

Upward Trendline And 50 DMA Line Violations Raise Concerns - Monday, January 07, 2008

Breakout Triggers Buy For Another Superstar - Thursday, October 04, 2007

STWNM - Advanced 3-Weeks Tight Pattern Worth Watching - Saturday, September 01, 2007