In a recent Penny Stock Detectives article, editor Danny Esposito points out that two widely used measures in technical analysis have uncovered new ways that can help investors maximize their returns and/or reduce their losses. Esposito believes the “golden cross” and the “death cross” are critical crossover technical indicators that investors ignore at their own peril.
“The simple moving average in technical analysis measures the average price of a particular stock or market over a period of time,” explains Esposito. “A five-day simple moving average is calculated by taking the closing price of a stock or market for five consecutive days, adding them together, and dividing by five, to achieve the average price during that period or, in technical analysis terms, the five-day simple moving average.”
The most important and most used simple moving averages (MAs) are the 50-day and the 200-day MAs, comments Esposito. The 50-day simple MA in technical analysis captures the medium-term trend of a market or stock. The rule is that as long as the price of the stock on the technical chart trades above the 50-day MA, the stock is said to be trending higher or in an uptrend in the medium term, notes Esposito.
Esposito further explains that the long-term uptrend or downtrend can be defined by the 200-day simple MA. As defined by technical analysis, a stock that trades below the 200-day MA is said to be in a bear market. Conversely, a stock that trades above the 200-day MA is said to be in a bull market. For this reason, the 200-day simple MA is a very important indicator for a market or stock, according to technical analysis.
One of the most watched technical indicators on a technical chart is the crossover, believes Esposito. When the 50-day simple MA crosses above the 200-day MA on the technical chart, this is bullish for the stock or market being followed. This is known as the “golden cross” in technical analysis because the medium-term indicator has gained more momentum than the longer-term indicator, which means the stock price has momentum behind it to make it rise, notes Esposito.
When the 50-day MA crosses below the 200-day MA on the technical chart, this is bearish for the stock or market being followed. This is known as the “death cross” in technical analysis, because the medium-term indicator is losing more momentum than the longer-term indicator, which means the stock price is set to fall, observes Esposito.
“The golden cross and death cross are useful technical indicators that can help an investor know when to buy and/or sell a stock or market,” Esposito concludes. “They are common yet powerful tools in technical analysis that investors should be familiar with and use.”

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The editors of Penny Stock Detectives believe low-priced stocks, when researched properly, present investors with great opportunities to accumulate wealth and to increase the value of their investment portfolios. You can learn more about Penny Stock Detectives at www.pennystockdetectives.com.

The editors of Penny Stock Detectives believe low-priced stocks, when researched properly, present investors with great opportunities to accumulate wealth and to increase the value of their investment portfolios. You can learn more about Penny Stock Detectives at www.pennystockdetectives.com.

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