The 200-day moving average… Its significance cannot be overstated.
This is the “line in the sand” that establishes whether stocks are trending higher or lower.
I’ve talked about this several times in past editions of Stock Surge Daily.
I’ve told you that I don’t buy stocks that are trading below this level – not under any circumstances.
Even in mediocre uptrends, stocks will generally hold above their 200-day averages.
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.
Charting a Broken Uptrend
Take a look at the Nasdaq 100 index in the chart below…
The market held above this line for the entire move off of the 2020 lows. But once it was broken back in mid-January, things got ugly in a hurry.
The Nasdaq made a few attempts to get back above the 200-day after that, but each of them ultimately failed.
Keep It Simple
A lot of traders love 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 you 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
Institutional investors like pension funds, mutual funds, hedge funds and other large players make massive institutional buys that fly under the radar of most individual investors.
But if you know how to spot those buys in real time, you can potentially follow the big money to big gains.
This is what I focus on inside my premium Stealth Trades research service.
Look, if you haven’t been making money in these markets, it’s time to try something new…
Embrace the surge,
Editor, Stock Surge Daily