Add up the last 200 days of prices and divide by 200. Do it every day and you get a slow, smooth line. Today’s price sits above it or below it.
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It hides the daily noise. Above the line means the last months were mostly up. Below means mostly down. It is the past, in one look.
It is the one chart line with serious studies behind it. A 2012 study of 60 years of the S&P 500, the 500 biggest US companies, found rules built on it looked better than just holding, in that past.
The line is slow on purpose. When a price turns, the 200-day line turns weeks or months later. By the time a price is clearly above it, much of the move has already happened.
Compare one price with its 200-day average. Say what it tells you: where the price has been. Nothing more.
The 200-day line sums up the past. It is slow on purpose, so it always turns late.
Do it today
Compare one price with its 200-day average.
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