The direction of the stock price trend is determined by comparing the average price of the last 2 days (2-Day Moving Average) with the average price of the following periods:

• Short-Term Trend:
  20-Day Moving Average
• Mid-Term Trend:
  50-Day Moving Average
• Long-Term Trend:
  200-Day Moving Average

The stock price is in a positive trend if the 2-Day MA (Moving Average) is higher than the average price of the 3 periods seen previously, while if it is lower it means that the price is in a negative trend. So, in summary:

Positive Trend:
2-Day MA HIGHER than 20/50/200-Day MA

Negative Trend:
2-Day MA LOWER than 20/50/200-Day MA

Real Example: Apple Inc (AAPL)

Here is a real example of how Apple’s Short-Term Trend is determined and shows when it goes from negative to positive.

The example shows only the case of the short-term trend (therefore using the 20-Day MA) because the concept is the same in the case of medium and long-term trends, the only thing that changes is the use of the 50-Day MA and 200-Day MA respectively:

Case 1 – Negative Trend:
In this time period Apple’s short-term trend is negative because the 2-Day MA (red line) is LOWER than the 20-Day MA (black line). So, in these cases, in the article, a red-colored percentage will appear in the table, indicating the presence of a negative trend. Whether the number is high or low will depend on the strength of the trend, but we will learn more about it in the dedicated section.

Case 2 – Positive Trend:
In the middle of the image there is a vertical dashed red line indicating the moment when the short-term trend changes from negative to positive. This is because the 2-Day MA (red line) for the first time becomes HIGHER than the 20-Day MA (black line). In this case, a green-colored percentage will appear in the table.

In the previous section we discovered how to determine the direction of the trend based on the position of the 2-Day MA relative to the moving averages that represent the trend in the short term (20-Day MA), medium term (50-Day MA) and long term (200-Day MA). If the 2-Day MA is higher then the trend is positive, while if it is lower the trend is negative.

Consequently, the strength of the trend is determined on how far the 2-Day MA diverges from the other 3 Moving Averages. The more the price of the last 2 days accelerates compared to that of the last 20/50 or 200 days, the greater the strength of the trend.

Real Example: Apple Inc (AAPL)

Taking the example of the previous section on Apple’s short-term trend, and focusing only on the positive trend for simplicity, we distinguish 2 different cases: Weak Trend and Strong Trend.

Case 1 – Weak Trend:
In this case we are talking about a weak positive trend because the 2-Day MA is only 1.5% higher than the 20-Day SMA, especially because the short-term positive trend has just begun.

Case 2 – Strong Trend:
After several trading sessions, Apple’s 2-Day MA accelerates and in fact we are talking about a strong positive trend because this time the 2-Day MA is 4.5% higher than the 20-Day MA, so the trend is 3 times stronger compared to the previous case (4.5% vs 1.5%).

In conclusion, within the article we find the strength of the trend (that 1.5% and 4.5% previously seen) for each of the top 150 stocks and for each of the 3 time periods (Short, Mid and Long Term).

Below is an example of how this data is shown in the article for each of the 150 Top Stocks and for each period of time considered: Short, Mid and Long term. Furthermore, as an additional data, the price growth margin is shown to be able to return to the maximum price recorded in the last 52 weeks (“52-Week High”) starting from the average price of the last 2 days. The data in the table are examples and not real.

In addition to showing the strength and direction of the trend data for each of the 150 stocks covered by the article, rankings are also shown in order to intuitively identify the stocks with the strongest positive and negative trend.

In the image below an example of the stocks with the strongest positive and negative long-term trend, with an indication of how strong the trend is (therefore the percentage distance between the 2-Day Moving Average and the 200-Day Moving Average). The data in the table are examples and not real.

In the section on determining the direction of the trend we found that it is based on the position of the 2-Day MA with respect to the moving averages that represent the trend in the short term (20-Day MA), medium term (50-Day MA) and long term term (200-Day MA). If the 2-Day MA is higher then the trend is positive, while if it is lower the trend is negative.

Therefore, to understand when the trend changes from being negative to positive, it is necessary to wait for the 2-Day MA to change from being lower to higher than the 20/50/200-Day MA and vice versa in the event of a trend passing from positive to negative.

In this article, in the case of a transition from a negative to a positive trend, this change is identified with the percentage of strength of the trend that is next to the name of the company that changes from being red in the previous day (because it was a negative trend) to be green in the next day (because the trend becomes positive). In any case, there is a section where the companies that show a change in trend from negative to positive and vice versa are shown, for each period of time.

Example: from Heaven to Hell

In the following example we show what happens when a completely positive trend, i.e. positive in the short, medium and long term, becomes completely negative and how this situation is represented in this type of article.

*”Hell” is not the real continuation of “Heaven”, but they have been taken in different periods because they are useful to represent the concept

Heaven = Completely Positive Trend
In this case, Apple’s stock price is in a completely positive trend, i.e. the 2-Day MA is above the 20-Day, 50-Day and 200-Day MA. Below is the example chart:

In this type of article a situation like this is represented with green numbers in the short, medium and long term trend boxes:

Hell = Completely Negative Trend

The passage from heaven to hell consists in the passage from a completely positive trend (case 1) to a completely negative one, passing through the various steps, i.e. that first the short-term trend becomes negative (case 2), then the medium-term one (case 3) and finally the long-term one (case 4). Below is Apple’s sample chart that fully represents this situation.

Case 1: FULL Positive Trend
The first case takes up the previous section called “Heaven” where the trend is positive in all time periods because the 2-Day MA is higher than the 20-Day MA, 50-Day MA and 200-Day MA.

Case 2: New Short-Term Negative Trend
The second case represents the moment in which, starting from a completely positive trend situation, the Apple stock price starts to drop and the 2-Day MA ends below the 20-Day MA and therefore the short-term trend becomes negative, while the mid-term and long-term ones remain positive, even if their strength is lower.

Case 3: New Mid-Term Negative Trend
The third case represents the moment in which Apple’s stock price continues to drop and the 2-Day MA also falls below the 50-Day MA and therefore also the medium-term trend becomes negative along with the short-term one, while the trend in the long term it can still be defined as positive, even if it has lost a lot of strength, a situation that can be easily identified in the tables shown.

Case 4: New Long-Term Negative Trend
The fourth case represents the moment in which we reach hell, therefore from a completely positive trend we pass to a completely negative one. In fact, Apple’s stock price continues to drop further and the 2-Day MA also falls below the 200-Day MA and thus the long-term trend turns negative, along with the short and medium one.

In the following image a representation of what would happen to the tables found in this article during the period in which the various cases occur. The numbers inside the table are invented and are for educational purposes only:

Therefore, this article is very useful for identifying both very positive situations, but also very negative ones and above all the daily update frequency allows you to check every day if the trend loses strength and if it goes in the opposite direction.