To me, the 200-day moving average (MA) is the most significant line on every chart I look at.
If you’re not putting this indicator on your charts, you are doing yourself a great disservice.
Every major charting package has it…
All you need to do is add a simple moving average and set the period to 200 days.
Regular readers know that I don’t buy stocks that are trading below this level – not under any circumstances.
Here’s why…
Charting a Bear Market
The 200-day MA is the “line in the sand” that establishes whether stocks are trending higher or lower.
Even in mediocre uptrends, stocks will generally hold above their 200-day MAs.
For example, take a look at the S&P 500 index in the chart below…
The market held above the 200-day MA line for the entire move off of the 2020 lows.
But once the S&P 500 broke this level at the start of this year, things got ugly in a hurry…
The index made a few attempts to get back above the 200-day after that, but each of them ultimately failed.
Subsequent rallies have also been stopped dead in their tracks by this key level, including the rally we’ve seen off the October lows.
This is one of the mains reasons why I’ve focused primarily on short positions in recent weeks.
Keep It Simple
A lot of traders use way too many indicators…
They love to overcomplicate their charts and look for dozens and dozens of signs of confirmation to determine whether stocks are going up or down.
But believe me… you really don’t need to do that. In fact, I believe you’ll be better off if you don’t!
Whether you’re buying individual stocks or trying to analyze the general market, just turn to the 200-day moving average.
Look to buy when price is above it, and sell when price falls below it.
It’s as simple as that.
Follow the Big Money
Now, there is actually a another way to know when buyers are ready to step back into the market…
When corporate insiders like CEOs, CFOs, executives and board members put down their own hard-earned money to buy shares of their own companies, it’s a huge vote of confidence.
After all, these folks have a footing of knowledge about their companies that Main Street investors simply do not.
It’s absolutely free to attend, so I really hope you’ll join me.
I’ll cover my strategy for trading alongside corporate insiders and generating potentially massive gains with less risk.
I look forward to seeing you there!
Embrace the surge,
Ross Givens
Editor, Stock Surge Daily
