Good things could be on the horizon when a stock surpasses the 20-day simple moving average. How should investors react?

A moving average represents a series of share price averages over time. A stock’s pricing chart may be characterized by spikes and declines, rather than moving in the same direction consistently.

This can help confirm up or downtrends. Some moving averages may also act like support or resistance lines. For example, 50-, 100- or 200-day averages could act as support or resistance lines.

Moving averages are the go-to tools for swing traders, helping them identify market trends, determine entry and exit points and understand market momentum. Each has its strengths and weaknesses ...

The best moving average to define bull and bear markets turns out to be a two hundred day average, moved downward on the price axis by 2%. Using this as the defining tool, we've been in a bull ...

Moving averages come in all kinds and flavors, but the most commonly used is simple moving average, of various lengths. Most popular on Seeking Alpha are the 20-day, 50-day, and 200-day moving ...

Moving average crossovers can also be valuable too. When the quicker-moving average (50 day for example) is above the slower-moving average (200 day), this is thought to be bullish.

While the theory might sound a bit complex, in practice moving averages are quite simple. For example, assume you wanted to compute the 200-day moving average for an index such as the S&P 500.