• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

The 200-Day Moving Average. It's Just a Number, Right?

Let's look at volatility, bearishness and the 200-day moving average of the Nasdaq's possible panic line.
By HELENE MEISLER
Jan 14, 2022 | 06:00 AM EST

That bout of volatility arrived more quickly than I expected it would, but I suppose I should not be surprised. I had thought this market would be filled with volatility this year.

But let's talk about how bearish folks have become. No wait, let's first talk about the 200-day moving average of Nasdaq. It now resides about 100 points below where Nasdaq closed. I have never been one to fuss over the 200-day moving average, because to me it's just a number. To me it matters if it is rising or has it rolled over and heading down. The reason most care is because -- especially in this day and age of so much passive and index investing -- we would assume that is the average price folks
"own" the index at over the last 10 or so months. So that would mean trading under there could put folks under water.

Note that 200 trading days ago was late March. Nasdaq was trading around 13000 at the time, so for now that 200-day moving average is still rising. Unless Nasdaq trades well under the levels seen last spring that average will keep rising. But maybe, just maybe, a break of it would give us some panic as folks fuss over it.

On a closing basis Nasdaq actually closed lower than it did on Monday; it was the lowest close since October. So now you know why it seems everyone seems so bearish. Are they really bearish? Well the American Association of Individual Investors (AAII) saw the bulls drop to 24%, the lowest reading since mid September. So I would say, using this metric, folks have pulled in their horns. As a reminder, the Investors Intelligence bulls chimed in at 43% this week and it is entirely likely they will fall under 40% next week. Using these two surveys folks are not bullish.

Using the National Association of Active Investment Managers (NAAIM) weekly Exposure the best I can say is they reduced their exposure over the last week (to 74), but that's not an actionable reading; there's still much "exposure" there.

The 10-day moving average of the put/call ratio is rising and at .88 it is in no man's land. It shows more bearishness, but not the sort we saw in December.

The statistic I will watch in the coming days is the number of stocks making new lows. Both Nasdaq and the New York Stock Exchange saw fewer new lows than they did on Monday, but so many stocks stopped right at Monday's intraday lows. So, it's hard to say what would happen if the market opens down on Friday. The peak reading for new lows is now 740 from Monday on Nasdaq. Thursday saw 430.

There's an old market adage that says corrections are the market's way of changing leadership. With the index movers out of favor the indexes are correcting and at least for now new leadership has emerged. Breadth on Thursday was mostly flat. Now that's the inverse of what we saw last summer, isn't it?

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.
TAGS: Investing | Stocks | Technical Analysis |

More from Stocks

I've Got Smith & Wesson in the Holster, but the Safety Switch Stays On

Jonathan Heller
May 23, 2022 12:30 PM EDT

I wouldn't jump the gun on this name, but here's why I find it compelling.

Bottom Fishing for Biotech Bargains

Bret Jensen
May 23, 2022 11:45 AM EDT

Here are three names I have added to in May.

Dow Is Poised for an Upside Breakout

Bruce Kamich
May 23, 2022 11:25 AM EDT

Here are our price targets.

It's Hard to Gauge Sentiment Right Now, and That Makes It Tough to Trade

James "Rev Shark" DePorre
May 23, 2022 11:00 AM EDT

Bears and bulls are trying to discern which way the market is flowing, though neither is secure in their position.

Can Costco Buck the Retail Train Wreck Trend? We're About to Find Out

Stephen Guilfoyle
May 23, 2022 10:45 AM EDT

There is risk associated with buying any retailer ahead of earnings at this point, but this guy dipped his toes in the warehouse club's shares anyway.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 02:24 PM EDT PAUL PRICE

    An Interesting Chart

    I'm betting heavily that stocks will be way up aga...
  • 10:10 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    "Market Timing for Dummies"
  • 01:44 PM EDT STEPHEN GUILFOYLE

    Stocks Under $10 Portfolio

    We're making a series of trades here.
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login