Below the 200-day moving average is an alarm bell for those investors who keep an eye on price charts. It’s a good signal that the direction has changed, longer-term, from up to down. This is true not just for stocks but for bonds, oil, gold, currencies and, in general, any asset that can be charted.
Other elements of price movement play a role in decision-making about buys and sells, but this one is a solid indicator of issues, whatever they may be. A drop below the 50-day moving average is a shorter-term signal but below the 200-day takes a lot of selling and can be a serious wake-up call.
5 NYSE Stocks Now Below Their 200-day moving averages.
American International Group.
That’s three closes below the 200-day (the red line) in December. AIG dropped below it in August, in September and in October, so this is a repeat performance. Rallies followed those drops but this one looks deeper.
The diversified insurance company has a market capitalization of $45.93 billion. The stock is a component of the S&P 500. It’s trading at 1.03 times book value with a price-earnings ratio of 20. American International pays a 2.15% dividend. The short float is 1.60.
Goodyear Tire.
The stock plunged in early August made a low in September and then rallied to a brief stint just above the 200-day for about four sessions. This month, it slid back under the red line and has remained there for five sessions.
The name-brand auto parts company is a Russell 2000 component with a market cap of $2.88. Goodyear trades at just 61% of its book value. The forward price-earnings ratio is 6.82. Debt is twice the amount of shareholder equity.
Navient.
The central feature of this chart is that the stock has traded below the 200-day moving average most of the year and then finds its way back above it on short-lived rallies. This month, it’s dropped back below again.
The credit services firm has a market cap of $1.62 billion. It’s a Russell 2000 component trading with a price-earnings ratio of 21 and at a 40% discount to its book value. The debt-to-equity ratio is 18. Navient pays a dividend of 4.25%. The short float is 8%.
Full disclosure: I am paying off a college loan from Navient.
Omnicom Group.
The stock had traded above the 200-day all year and then, in December, plunged to beneath it on heavy volume. Now, with three closes below the red line, the price seems to be stabilizing.
This group of advertising agencies has a market cap of $18.09 billion. The price-earnings ratio is 12. The debt-to-equity ratio is 1.96. Omnicom pays a 3.20% dividend. The short float is 5.95%.
Varonis Systems.
The stock managed to close above the 200-day every month this year up until November. A brief rally took it back above and now it’s closed for three sessions in a row below the red line.
The software stock has a market capitalization of $5.40 billion. It’s a component of the Russell 2000. There is no price-earnings ratio has there are no earnings. The debt-to-equity ratio is 1.76. The short float is a hefty 9.99%.
Stats courtesy of FinViz.com. Charts courtesy of Stockcharts.com.
More analysis and commentary at johnnavin.substack.com.
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