To most novice users, technical analysis probably seems like drawing up make-believe lines on a chart to make it look good; however, stock charting is really all about using previous trends to forecast future price movement.
Whether it be patterns, indicators, or studies, ultimately all sources of technical analysis are created through the price history of an individual security.
A popular indicator to spot bullish trending stocks is the moving average crossover. The concept is pretty simple, if a smaller moving average (i.e. 50-day) crosses above a longer moving average (i.e. 200-day), then this is considered bullish and a short burst higher should be expected.
Besides this type of move just being considered 2 averages crossing; it signals that the short-term trend has picked up in relation to the long-term trend.
Ultimately, how you play these stocks is up to the individual; however, the type of moving average crossover I mentioned up is best suited for quick profits. It also helps that the averages have not consistently crossed over each other within the last couple of trading weeks.
I like to run a scan for stocks showing this play by using the screener on Finviz.
Along with the moving average crossover and some other inputs, below is a list of stocks that have recently gone through a moving average crossover (50-day over 200-day). You can see chart snapshots of all these stocks here.
My favorite ones are in bold.
- Alberto-Culver Co. (ACV)
- Anworth Mortgage Asset Corp (ANH)
- Gold Fields Ltd. (GFI)
- Hatteras Financial Corp (HTS)
- InfoLogix, Inc (IFLG)
- NutriSystem Inc (NTRI)
- Quanta Services Inc (PWR)
- GT Solar International, Inc (SOLR)
- ValueClick, Inc. (VCLK)
Lets see how they perform over the week.
Learn more about reading stock charts and technical analysis.