The S&P 500 is on a roll. It is constantly moving to regain its maximum for the year. Most of the market’s optimism is from the expectations of a possible soft landing due to cooling growth. The continued optimism also pushed some stocks into long-term bullish territory as they crossed their 200-day SMA. The 200-day SMA is perceived by traders and investors as a long-term indicator and the last line of defense when looking at its long-term trend, and when a stock crosses above it, it could signal that a new trend is emerging.
While some may argue that the 200-day SMA is a bullish signal and signals a change in trend, it doesn’t always happen. Keeping a close eye on stocks that are moving above their 200-day SMA puts you in a position to take advantage of the opportunity when price action and buying pressure confirm a reversal in market sentiment.
This article will look at three stocks that recently crossed their 200-day SMA and are now showing strong bullish signals. Investors and traders can take advantage of these signs before the rest of the market jumps on the new trend.
Eastman Chemical Company (EMN)
Eastman Chemical Company is a specialty materials company that produces polymers, films, plastics, and industrial chemicals for use in electronics, medical, agriculture, and construction industries. The company serves customers worldwide and is a pioneer in many advanced materials and innovative solutions. It has made strides in innovation by further developing solutions for sustainable packaging. The company also collaborates with Ostium Group Partners incorporating sustainable packaging into medical devices.
Is now the time to buy Eastman Chemical Company?
EMN closed above its 200-day SMA (green line) after bottoming out and reversing its low. Its 14-day RSI is currently in the overbought zone, signaling that prices may be on the right track. Investors who want to buy into EMN can wait for the price to stay above the 200-SMA and establish its support there. However, investors should consider the possibility of a correction around its immediate support in the $78.00 area.
The Southern Company (SO)
The Southern Company is a holding company in the electric power industry. It holds all of the common stock of Southern Power Company and Southern Company Gas. The Southern Company operates Mississippi Power, Alabama Power, and Georgia Power as community utilities serving retail customers in the Southeast. It also distributes natural gas to customers in Virginia, Georgia, Illinois, and Tennessee through its gas distribution services. In addition, the company recently made two acquisitions: the Southern Cheyenne Solar Facility and the Millers Branch Solar Facility.
Should you be wary of Southern Company?
DO closed above its 200-day SMA and is trading in a narrow range between that and $71.80. Volume supports the price increase, and RSI is currently in its bullish area. Investors looking to buy SO can wait for prices to stabilize above their SMA or the price to clear their resistance. It all boils down to how aggressively you want to take a position in SO. Would you want to buy early, climb into the positions, or wait for a breakout and confirmation?
Elevance Health, Inc. (ELV)
Elevance Health, Inc. is a health insurer that operates in four primary segments: Health Advantage for its health plans for employer groups, individuals, and federal employees health benefits (FEHB) program members; Carelon Services for health-related services such as integrated care delivery, behavioral health, etc.; CarelonRx for its pharmaceutical business; and Corporate Services. The company recently announced its partnership with AAMD to assist and support the adoption of IDD training in mainstream medical practice. The company is also recognized as one of the top 100 companies to work for.
Should you be optimistic about Elevance Health?
ELV closed above its 200-day SMA for the second time this quarter, possibly suggesting a change in trend. Its 100-day SMA (yellow line) shows that it is starting to slope upward slowly, and the medium-term trend may be bullish. Investors who want to buy into ELV can either wait for prices to trade and close above the 200-day SMA for confirmation or wait for short-term support to be established.
Final Thoughts
The 200-day SMA is one of the indicators closely followed by long-term traders and investors. It helps provide the market’s sense of a particular security. However, this is only one of the many ways to see the sentiment of specific stocks. Investors and traders still need to do due diligence to ensure proper risk management in every trade.
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As of the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. For more information, please see Barchart’s Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.