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There is a lot to be said about the 50/200 Day moving averages on a daily stock chart. One of the most commonly overlooked Technical Indicators due to simplicity but should be watched with a discipline eye.

When the 50 day moving average is running above the 200 day moving average we are usually in a bull market or the stock could continue to rise.

When the 50 day moving average is running below the 200 day moving average we are usually in a bear market or the stock could continue to go down.

When the two lines start to converge or crossover there are a couple points to be aware of.
- When the 50 day moving average dips beloow the 200 day moving average. This could be the beginning of a downward trend and would be very cautious about buying, possibly sell if profit has already been made.
- When the 50 day moving average passes through (rises above) the 200 day moving average. This could be the beginning of a upward trend that may be sustainable, possibly buy at this point.

Common wisdom will tell you to watch out for the approaching crossover point and get in (buy/sell stock) before this happens. But be on the correct side of the trade. If we have been in a bear market and the 50 day moving average is making a charge to the 200 day moving average, well this may be the time to go long on a stock or exchange traded fund.

If you would like to learn about other important buy/sell signals produced from moving averages visit our page Stock Trading Using Moving Averages

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