SMA200
200-Day Moving Average
💡 What is SMA200 (200-Day Moving Average)?
SMA200 (200-Day Simple Moving Average) is calculated by adding up the closing prices of the most recent 200 trading days and dividing the total by 200. Simply put, it is the average stock price over roughly the past 10 months. It is one of the most widely used long-term trend indicators in the stock market, referenced by almost everyone—from institutional investors to individual traders.
Understanding with an analogy: Think about your body weight. If you weigh yourself every day, the number will change a little each day depending on how much water you drank or what you ate. But if you calculate your average weight over 200 days, you can filter out the daily ups and downs and see the "real trend" in your weight. If your current weight is above the average, you are trending upward; if it is below, you are trending downward. In the same way, if the current price is above the SMA200, the stock is in an uptrend; if it is below, the stock is in a downtrend.
Why 200 days specifically? The U.S. stock market has about 252 trading days in a year, and 200 days covers roughly 80% of that. This window has been tested over many decades as a good period for filtering out short-term noise while still showing a meaningful long-term trend. The legendary investor Paul Tudor Jones famously said, "I never own a stock that is below its 200-day moving average."
SMA200 is a core tool in Technical Analysis. It works best when used alongside other moving averages (SMA50, SMA20, etc.) or technical indicators, rather than on its own. Because many institutional investors and algorithmic trading systems use SMA200 as a buy/sell signal, real buying and selling activity tends to cluster around this line, creating a "Self-Fulfilling Prophecy" effect.
📐 How to Calculate SMA200
Formula:
SMA200 = (Day1 Close + Day2 Close + ... + Day200 Close) / 200
Real example – Apple (AAPL): If the sum of Apple's closing prices over the most recent 200 trading days is $40,000, then SMA200 = 40,000 / 200 = $200. If Apple's price today is $215, it is trading above the SMA200 ($200), so we interpret this as an uptrend. The stock is +7.5% above its SMA200.
How Finviz displays it: In the Finviz screener, the SMA200 column shows, as a percentage (%), how far the current price is above or below the SMA200. For example, an SMA200 value of -15% means the current price is 15% below the 200-day moving average. +20% means the price is 20% above the 200-day line.
The SMA (Simple Moving Average) gives the same weight to every trading day's closing price. In contrast, the EMA (Exponential Moving Average) gives more weight to the most recent data. Use SMA200 when you want to look at the long-term trend, and use EMA when you want to detect trend changes faster. Both are useful, but SMA200 is the standard for long-term trend analysis.
📊 How to Interpret SMA200
When price is above SMA200 (positive)
It indicates a long-term uptrend. This is a good environment to hold long positions or to look for buying opportunities on dips. The SMA200 acts as a support level, and many investors see a pullback toward the SMA200 as a "buy the dip" opportunity.
When price is below SMA200 (negative)
It suggests a long-term downtrend. You may want to hold off on new buys or consider reducing the size of existing positions. The SMA200 acts as a resistance level, and if the price fails to break above it, the downtrend may continue.
Golden Cross
A Golden Cross is when the SMA50 (50-day moving average) crosses above the SMA200 from below. It is interpreted as a strong buy signal signaling the start of a long-term uptrend. A classic example is the S&P 500 forming a Golden Cross during the recovery after the 2020 COVID crash.
Death Cross
A Death Cross is when the SMA50 crosses below the SMA200 from above. It is a bearish signal that warns of the start of a long-term downtrend. However, not every Death Cross leads to a big decline, and false signals are not uncommon.
The slope of SMA200 also matters. If the SMA200 itself is sloping upward, the long-term trend is healthy. If the SMA200 flattens out or turns downward, it can be a signal that the trend is changing. Even if the price is above the SMA200, you should be cautious once the SMA200 slope starts bending over.
🔄 Comparison with Similar Indicators
SMA50 (50-Day Moving Average)
A moving average used to see the medium-term trend. It reacts to the current price faster than SMA200. When the SMA50 is above the SMA200, it is a positive signal that the medium-term uptrend is still intact. Swing traders use it frequently.
SMA20 (20-Day Moving Average)
A moving average used to track the short-term trend; it covers roughly one month of average prices. It is useful for timing short-term trades, and using it together with SMA200 lets you check whether the short-term and long-term trends agree.
EMA200 (200-Day Exponential Moving Average)
A moving average that gives more weight to recent prices. It reacts to trend changes faster than SMA200, but it also produces more false signals (whipsaws). When EMA200 and SMA200 differ a lot, it means recent price moves have been sharp.
Bollinger Bands
Bollinger Bands draw upper and lower bands around the SMA20 using the standard deviation. If SMA200 shows the "trend," Bollinger Bands show "volatility" and "overbought/oversold" conditions. Using both together lets you see the trend and entry timing at the same time.
🎯 Practical Applications
1. Trend Filter: This is the most basic use. Before considering a buy, first check whether the stock is above the SMA200. A stock below the SMA200 is in a long-term downtrend, so even if its fundamentals look great, you should be careful. A well-known example of a strong uptrend is NVIDIA (NVDA), which traded consistently above its SMA200 throughout the 2023–2024 AI rally.
2. Using as support/resistance: Because so many investors watch the SMA200, it naturally acts as a support or resistance level. If an uptrending stock pulls back to the SMA200, it can be a buying opportunity; if a downtrending stock bounces up to the SMA200, it can be a selling opportunity. Tesla (TSLA) is very volatile, but it often shows a pattern of bouncing off the SMA200.
3. Judging the overall health of the market: By checking the percentage of S&P 500 stocks that are trading above their SMA200, you can gauge the overall health of the market. If this ratio is above 70%, the market as a whole is in a healthy uptrend; below 50% suggests a possible entry into a bear market. This "Market Breadth" indicator is very useful alongside individual stock analysis.
4. Using as a screener filter: In the Finviz screener, you can use the SMA200 filter to narrow down your investment candidates. For example, stocks between +5% and +20% above their SMA200 are useful for finding names that are in an uptrend but not yet overheated. Conversely, stocks that have dropped more than -20% below their SMA200 but still have solid fundamentals can offer contrarian opportunities to catch a bounce after an excessive sell-off.
5. Timing long-term investments: If your goal is long-term investing, a strategy of starting to buy in installments near the SMA200 can work well. When high-quality dividend stocks like Coca-Cola (KO) or Johnson & Johnson (JNJ) pull back toward their SMA200, it can be an attractive entry point for long-term holders.
🏭 Characteristics by Sector
Growth Stocks
Growth stocks like NVIDIA (NVDA), Tesla (TSLA), and Amazon (AMZN) can sit far above their SMA200 (by +50% or more) during strong uptrends. In these cases, the SMA50 is often a more practical support/resistance level than the SMA200. If a growth stock falls all the way to its SMA200, that signals a very significant correction.
Value/Dividend Stocks
Stable dividend stocks like Coca-Cola (KO) and P&G (PG) tend to trade in a relatively narrow band around their SMA200. Because they don't stray far from this line, trading strategies built around the SMA200 work well for them.
Cyclicals
Industrials like Caterpillar (CAT) and Boeing (BA) often move above and below their SMA200 as the business cycle changes. During economic expansions, they tend to trade above it; during recessions, below it. For these names, a break of the SMA200 can signal a turn in the economic cycle.
ETFs/Indices
You can apply SMA200 analysis to ETFs like SPY (S&P 500 ETF) and QQQ (Nasdaq 100 ETF). When a major index ETF loses its SMA200, it signals a bearish shift for the whole market, which is very useful for managing risk across your entire portfolio.
⚠️ Caveats
First, SMA200 is a lagging indicator. Because it is built on 200 days of past data, it takes time to detect changes in the trend. The price will already have fallen quite a bit before it drops below the SMA200, and it will already have risen quite a bit before it moves above it. So using it alone for trade timing is risky; you need to use it with other indicators.
Second, false signals are frequent in sideways markets. When the price chops back and forth around the SMA200 without a clear direction, you get "whipsaws." The price breaks above the SMA200 and then falls back below it, then breaks above again, producing repeated false trading signals. In these periods, it's better to combine SMA200 with volume analysis, or wait to see if the price can stay on the new side of the SMA200 for a while.
Third, consider the characteristics of each stock. Stocks with high volatility (high beta) frequently break away from and then return to the SMA200. By contrast, if a low-volatility utility stock breaks away from its SMA200, that can be a much more meaningful signal. It helps to look at how each stock has historically behaved around its SMA200.
Fourth, SMA200 can diverge from fundamentals. A company with great earnings can fall below its SMA200 if the whole market is dropping, and a company with weak earnings can stay above its SMA200 during a liquidity-driven rally. Technical analysis should always be used together with fundamental analysis.
✅ Investment Checklist
☑ Have you checked whether the stock you're interested in is above or below its SMA200?
☑ Have you checked the slope of the SMA200 (rising, flat, or falling)?
☑ Have you checked the relative position of SMA50 and SMA200? (Golden Cross / Death Cross)
☑ Have you also checked the SMA200 status of major indices (SPY, QQQ)?
☑ Have you cross-checked that the technical signal matches the fundamentals?
☑ Have you checked whether the SMA200 break was accompanied by strong trading volume?
❓ Frequently Asked Questions (FAQ)
Q. Is it okay to buy shares of a good company that are trading below the SMA200?
A. It depends on your investing style. Trend-following strategies avoid buying stocks below the SMA200. But from a value investing perspective, a quality company falling below its SMA200 can be seen as a buying opportunity at a discounted price. The key is to figure out why it is below the SMA200. The answer differs depending on whether the issue lies with the company's fundamentals or whether it is simply dragged down by a broad market decline. In the latter case, it can actually be a good buying opportunity.
Q. Should I buy immediately when a Golden Cross appears?
A. A Golden Cross is a strong buy signal, but not every Golden Cross leads to a big rally. Historically, prices have risen after a Golden Cross more often than not, but false signals do occur. To boost the reliability of the signal, check whether it comes with rising volume, whether it agrees with the broader market trend, and whether the stock's fundamentals support it. It's also safer to wait 1–2 weeks after a Golden Cross to see if the new uptrend holds.
Q. Which should I pay more attention to: SMA200 or SMA50?
A. It depends on your investment horizon. For long-term investing over months to years, SMA200 is more appropriate. For medium-term trading over weeks to months, SMA50 is more useful. The best approach is to use both. If the price is above both SMA50 and SMA200 (a Golden Cross state), it indicates a strong uptrend; if the price is below both (a Death Cross state), it indicates a strong downtrend.
Q. Can I apply SMA200 to weekly or monthly charts?
A. Yes, you can. The 200-week moving average on a weekly chart reflects roughly four years of trend and is useful for ultra-long-term investors. However, when people simply say "SMA200," they usually mean the 200-day moving average on a daily chart. Finviz's SMA200 is also based on the daily chart. For weekly or monthly SMA200, you can set it up directly on chart platforms like TradingView.
🇰🇷 Notes for Korean Investors
The 200-day moving average is also widely used in the Korean stock market. In Korea, people often refer to it as the "200-day line" or the "200-il line," and you will frequently see headlines about the KOSPI index breaking above or below its 200-day moving average. The underlying principles are the same as in the U.S. market, so you can apply your Korean-market experience directly to U.S. stocks.
You can also add moving averages to charts in the overseas-stock apps offered by Korean brokerages such as Kiwoom Securities, Samsung Securities, and Mirae Asset Securities. Just add SMA 200 in the chart settings. However, the chart features in Korean apps can be more limited than those on TradingView (tradingview.com) or Finviz, so for more precise technical analysis, using overseas platforms is recommended.
You should also keep in mind the time-zone difference between the U.S. and Korean markets. The U.S. market opens at 11:30 p.m. Korean time (during daylight saving time), so if an SMA200 break happens during the U.S. session, it can be hard for Korean investors to react in real time. For that reason, using SMA200 on U.S. stocks is realistically more suited for identifying medium- to long-term trends rather than short-term trades. Placing limit orders or conditional orders in advance lets trades be executed automatically near the SMA200.