The 200-day MA indicates the average price for the preceding 200 trading days. It's a good indicator for the stock's trend (above the 200-day MA is generally good, below is generally bad). This is important because it means that a stock is currently trading at a higher level than the average price over the preceding 200 days. If a stock stays above this line for a while, it is in an uptrend. Or in the case of CCSC, which has been in a wide trading range for 2 years, the 200-day MA has been around 20 for quite a while.
When a stock bounces off of, or is supported by, any moving average, it indicates strength in the stock. In the case of CCSC, while it has been weak recently, it has not fallen below the 200-day MA, perhaps indicating some strength. Generally, a stock will not fall below the 200-day MA if everything is positive. I believe this is the case for CCSC, so I'd be surprised if it fell below it. The reason a stock bounces, as if it seemingly "knows" where the trendline lies, is because buyers of the stock view this line (or moving average) as a support level, and believing that CCSC won't fall below it, they buy more when it reaches the average.
Here's a good graphing tool, with which you can use a bunch of moving averages:
quotes.galt.com
Todd |
