It's simpler than that. You would expect price to enter the bands, but once price drops below all the MA's, get out long (it doesn't mean short yet). When all the MA's point down in the correct order, you better be short.
MA's are very useful. Bear markets don't just switch from a full bore bullish look (second pic) to a bearish look (first pic). They rock, like you're tipping over a soda machine, before it goes bearish. You get bunching of the MA's many months before (in this case what you see at the end of 2006). Without fail. But don't tell that to people who think MA's are useless.
