Moving Average

A moving average (MA) calculates the average closing price over a set number of periods. The 50-day MA averages the last 50 closes; the 200-day MA averages the last 200. These are the two most widely watched moving averages in equity markets. When a shorter MA crosses above a longer MA (the 'Golden Cross'), it's considered bullish. When it crosses below (the 'Death Cross'), it's bearish.

Moving averages act as dynamic support and resistance levels. In bull markets, stocks often bounce off their 50-day or 200-day MA after pullbacks. A decisive break below the 200-day MA is considered a significant bearish signal by many technical traders.

Example: During the 2020 COVID crash, the S&P 500's 50-day MA crossed below the 200-day MA (Death Cross) in late March 2020 — right near the bottom. By September 2020, it had crossed back above (Golden Cross), confirming the new bull market. Traders who sold on the Death Cross and bought on the Golden Cross made profitable, if imperfect, decisions.

Moving averages are one of the charting tools available in BMInsider's market analysis features, complementing the fundamental analysis in our 100X Insider Reports.