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Percentage of Stocks that are trading between their 50 and 200-day Moving Averages
Market indicators such as the percentage of stocks that are trading above or below a specific moving average are well known and often used to determine whether the market is bullish or bearish.
There are many other composites or market indicators that use the close price and the moving average of stocks within a group (Example: S&P 500 Stocks). One of them is the percentage of Stocks that are trading between their 50 and 200-day Moving Averages.
This market indicator calculates the percentage of stocks that have either closed above 50-SMA and below 200-SMA or closed above 200-SMA and below 50-SMA. In the first instance, the stock is short term bullish and long term bearish, while in the second instance the stock is long term bullish and short term bearish.
A decrease in this composite indicator signals an increase in market volatility while an increase in the composite is often a signal of a decrease in market volatility.
Trading financial instruments, including foreign exchange on margin, carries a high level of risk and is not suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in financial instruments or foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.