Moving average

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MarketWatch  Oct 14  Comment 
It usually means bad news, but that’s not the case today, writes Mark Hulbert.
MarketWatch  Oct 7  Comment 
The S&P 500 holding above its 200-day moving average for nearly two years is a record waiting to be broken, says Lawrence McMillan.
The Economic Times  Oct 6  Comment 
Tech shares were among the strongest of the day after HP Co said it would split into two public companies, sending shares up 4.2 per cent.
Forbes  Sep 25  Comment 
In trading on Thursday, shares of Cogeco Cable Inc. (Toronto: CCA) crossed below their 200 day moving average of $57.26, changing hands as low as $57.04 per share. Cogeco Cable Inc. shares are currently trading down about 2.2% on the day. The...
Reuters  Sep 24  Comment 
U.S. stocks jumped in a broad advance on Wednesday, with the S&P 500 snapping a three-day losing streak and climbing back above a key technical level in a move that pointed to improving near-term momentum.
The Economic Times  Sep 23  Comment 
"It is possible that we close fairly near the lows of the day and a test of 50 day moving average 7820-7850 may not be totally out of the question."
Forbes  Sep 11  Comment 
In trading on Thursday, shares of Freehold Royalties Ltd (Toronto: FRU) crossed below their 200 day moving average of $24.20, changing hands as low as $24.12 per share. Freehold Royalties Ltd shares are currently trading down about 0.2% on the...
Forbes  Sep 11  Comment 
In trading on Thursday, shares of Tourmaline Oil Corp (Toronto: TOU) crossed below their 200 day moving average of $51.10, changing hands as low as $50.76 per share. Tourmaline Oil Corp shares are currently trading off about 2% on the day. The...
Forbes  Sep 10  Comment 
In trading on Wednesday, shares of Resolute Forest Products Inc (Toronto: RFP) crossed below their 200 day moving average of $18.79, changing hands as low as $18.74 per share. Resolute Forest Products Inc shares are currently trading down about...




 
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A moving average is a smoothed-out trend line built from an underlying set of data - stock prices in the context of investing. The moving average is calculated by taking, for each point in time, the average values of the underlying data from the previous N timepoints. So, for example, the 10-day moving average for a stock price is the average price of the previous 10 days' closing prices for every given day. The average is said to be "moving" because the time period over which the average is calculated is always the previous ten days of data for each day, and therefore is different for each day.

Moving averages smooth out data over time, and technical traders believe they reveal an underlying trend in a security's price. By increasing "N" - IE, by looking at, for example, a 200 day moving average instead of a 10 day one, a trader would see a trend on a larger scale than with the 10-day moving average, but with decreased responsiveness - IE, only long after large changes in the stock price would the 200-day moving average start to tend in a new direction, given the weight of all the historical prices in the 200-day moving average.

Exponential moving averages give more weight to the latest data points in the moving average calculation, making them more responsive to recent changes in stock price.

Technical traders will look to the convergence or divergence of moving averages, known as MACD, with different periods (or values of "N") to indicate patterns of resistance or support which technical traders believe indicate where a stock price is likely to move in the future.

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