One of the most frequently-used technical trading indicators is the simple moving average (SMA). Like the name implies, a simple moving average is just a simple average of a stock’s price over a specific window of time. Popular SMAs for technical traders include the 20-day, 50-day and 200-day SMA.
Moving average is one of the best ways to smooth out the noise in a stock chart. By taking an average price over a given period of time, a trader can get a better idea of the general direction a stock is moving.
Moving averages often serve as key technical support and resistance levels for stocks. A crossover above a key moving average is often used as a buy signal and vice-versa.
As a rule of thumb, if a stock’s share price is above a key moving average, the stock’s trend is considered to be bullish and the moving average is a potential support level.
Bullish Crossover Stocks
Here’s a look at nine S&P 500 stocks that just crossed above their 200-day SMA, according to Finviz.
- General Mills, Inc. GIS
- Lincoln National Corporation LNC
- Ford Motor Company F
- American International Group Inc AIG
- AmerisourceBergen Corp. ABC
- Fortive Corp FTV
- SBA Communications Corporation SBAC
- DISH Network Corp DISH
- Noble Energy, Inc. NBL
Benzinga’s Take
Just because a stock crosses above its 200-day SMA doesn’t mean it's a screaming buy. For example, a stock that crossed above its 200-day SMA after an extended bearish period is likely a strong candidate for a reversal, whereas a stock that has repeatedly been crossing above and below its 200-day SMA due to a narrow trading range could ultimately break out in either direction.
Do you agree with this take? Email feedback@benzinga.com with your thoughts.
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