When a stock or the market is moving up, at some point significant selling will start to reveal itself with winder than normal spread and volume on the down side. This is how smart operators start to unload their shares.they are selling at high prices when the price action is attracting a lot of weak buyers. Preliminary Supply is important for us for several reasons. First, it is considered the first important selling during the uptrend. It will often cause a sharp reaction with heavier then previously seen volume and wider price spread as the price reacts often deeper than previous reactions. It is often the start of the distribution process. It is also important to us as it reminds us that the Buying Climax is the next principle in the logical sequence of events. It advises us to check our figure count, reexamine the objective range, and be prepared to exit our long positions on the Buying Climax. And finally, Preliminary Supply can often be use in measuring implications for the ensuing move down. The Last Point of Supply will sometimes be at the same level as Preliminary Supply. When this happens, your figure count can be taken from the Last Point of Supply all the way to Preliminary Supply. Of course, you will need to break your figure count down into phases, and only take a count as far as Preliminary Supply if the market action suggests to do so.