The easiest way to learn to run the FundScanner is to play with it, slicing and dicing the database using the different search criteria. So for starters, let's explain the search parameters.

Relative strength gauges a fund's performance relative to its peers. For instance, a fund with an RS of 95 has outperformed 95% of all funds over the selected time frame. The FundScanner allows you to search for funds with relative strength above or below any given level over a variety of time frames.

Why is relative strength important? Whether you're talking about funds or stocks, investments with high RS scores tend to outperform in the future. Likewise, stocks or funds with low RS scores usually continue to lag the market in the future. For more on this topic, check out the tutorial Making the Trend Your Friend.

Be aware that a high RS score does not necessarily mean that a fund or stock is in an uptrend. A stock which made an explosive move over, say, the first half of the year, then entered a decline for the rest of the year could still have a 12-month high RS if the upward leg was strong enough. And if the market is in a general decline, many high RS funds -- and stocks, for that matter -- will be those which are giving ground the least, but they'll still be in declines. 

So if you're hunting for funds in strong uptrends, it's a good idea to set high RS parameters for several time frames, recent as well as more long term. For example, you could set the FundScanner to search for funds with 12-, six- and three-month RS scores greater than or equal to, say, 97.

By mixing up widely divergent RS scores over different time frames can lead to some interesting results as well. For instance, perhaps you want to locate strong-uptrending funds that may be breaking down. You could set the RS scores of greater than or equal to 95 for the 12- and six-month time frames, and less than or equal to 30 for the one-month time frame. 

Or you can look for once-out-of-favor funds that appear to be turning around. So reverse the process. Sort for funds with low long- and intermediate-term RS values but high short-term RS values.

Remember that these lists represent candidate for further research and perusal. For instance, you should analyze a candidate fund's chart, which you can access via the FundScanner just by clicking on each fund's thumbnail-sized chart icon, which is the letter C. Once you have the chart up, by clicking "show controls" you can vary the time frame and other characteristics of the chart. 

The FundScanner also allows you to sort for prospective investments using one or more moving average parameters. A moving average simply amounts to the average of a fund's closing share prices over a trailing time frame. The FundScanner enables you to sort for all funds regardless of where they stand relative to their moving averages. Or you can zero in on funds above or below their average share price for the past 20, 50 and 200 days and 20 and 50 weeks.

There is nothing magical about a moving average. But its a tool that has its uses. Generally speaking, it's healthy when a fund or stock's share price is above its current 50- and/or 200-day moving averages. Once a fund is below those levels, you can bet that many of its component stocks are under their averages as well. This makes them vulnerable to "weak hands," unhappy shareholders who are inclined to sell their shares, further depressing the price of the stock.

It's also can be a bearish sign if fund pierces below its 200-day moving average after having tracked above the line. It can be bullish if an uptrending fund or stock finds "support" at its 200-day, bouncing off the moving average to resume its advance.

Some investors like to buy strong, uptrending funds or stocks on pullbacks, provided they find support at their 50- or 200-day moving averages. You can use the FundScanner to draw up a list of these potential candidates. For instance, you could set FundScanner to scan funds with high long- and intermediate-term RS values and low short-term RS values and which are holding above their 200-day moving averages. Then call up the individual charts on the listed funds for further analysis. 

Hedge fund manager Mark Boucher, who has tested and invented many trading indicators and models, considers the 50-day and 200-day moving averages to be decent but secondary technical tools. He also advises investors and traders to avoid market-timing systems that are based on convergences of 50-day and 200-day moving averages.

"There's a lot of people who use crossovers of moving averages in directional systems," Boucher said. "I've done a lot of testing, and these systems really are not effect. There are certain moving averages like the 50-day and the 200-day that people really watch a lot. So those are pretty good rough guidelines to where support levels should be. They seem to work better with the major averages than on individual stocks."

Some active-investing systems use moving averages as a trailing stop. Jay Kaeppel, director of research at Wheaton, Ill.-based Essex Trading Co., has developed a weekly system for trading Fidelity Select funds which involves investing in high-RS funds in uptrends, then exiting them if they violate their long-term moving averages. 

This calculation shows whether cash is flowing into, or out of, a security. In other words, one can deduce whether demand, or buying, by institutions like mutual funds and pension systems is overpowering selling, or supply, a bullish sign that can precede an explosive upward move in share price. Or one can spot the contrary -- selling, or supply, overwhelming demand, which can drive a share price lower.

A reading of +3 on the Money Thrust Indicator is most positive and indicates buying is overpowering selling. A reading of -3 is most negative and indicates selling is overpowering buying. A zero indicates that buying and selling are matched.