Learning about the 200(ma), question

[Thunderman]

Why do people look at the 200(ma) and the fact that companies that are on the fall have a day where the sale price is above the 200(ma)? What does it mean that the price for a stock has gone above the 200(ma), or even the 50(ma)?

Thunder

[englishman26]

200MA is just considered a good technical measure of a long term trend that smooths out the overbought and oversold periods and enables, when all else is equal, to decide on a safe buy point (or sell point if the trend is down and you're selling short).

[john_for_u80]

Why do people look at the 200(ma) and the fact that companies that are on the fall have a day where the sale price is above the 200(ma)? What does it mean that the price for a stock has gone above the 200(ma), or even the 50(ma)?

Thunder

Good stocks bounce on 200DMA. Look at the chart history and see what the stock has done previously when it touched 200DMA or 50DMA. Strong stocks hardly comes near 200DMA but they do come once in a while close to it.

Institutional buyers/Professional traders keep their buy orders just above 200DMA on good stocks.
APPL is an example. POT is one more example. Look at these stocks on weekly and daily chart.

Important thing to note: Major Indices like DOW and S&P have to snap back up or down if they are farther from 50 DMA or 200DMA. DOW & S&P were way below it couple of weeks ago. They got back up. Look their chart history on weekly and daily time frame!

http://stockcharts.com/h-sc/ui?s=$INDU&p=D&yr=3&mn=0&dy=0&id=p65617479986

One more thing, stock price moves much faster than MA so if the stock is far stretched from these 50 & 200DMA, they come down, if they break down on heavy volume. Downside is huge, better get out leaving hope in the dump. You can find such charts all over in commodity sector!
If up trending stock consolidates then MA will reach till there slowly in days, weeks which is good!