The 50-day moving average is a popular way to measure short-term momentum and price trend. This line is the average closing price over 50 periods. This technical indicator can be perceived as the dividing line between a stock that is technically healthy and one that is not.
Of the stocks in the S&P 500, 371 or about 74%, opened above their 50 day moving average today. Today in the Dow Jones Industrial Average, 23 of the 30 stocks are opened today above their respective 50.
On the other hand, the 200-day moving average is an indicator of long-term trend. Here, stocks like the more economically sensitive like CAT and AA are very much so off their recent highs and under their 200 day moving average. The high today in AA just touched its 200-day and pulled back. While it may be tempting to pick bottoms in the losers, perhaps it is prudent to stay with the proven winners.
The chart below is an interesting indicator. While it may look like just scribbles or bar code on a chart, it actually represents the NYSE advancing declining bias on a daily basis. The yellow and blue lines are respectively the 50 and 200 day moving average. This chart is confirming the bullish sentiment and price action in the market. Basically it is important to watch the yellow line fluctuate relative to the blue, for it represents the average short term bias of issues (stocks).
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Data courtesy of Thinkorswim