The 200-day simple moving average (SMA) is widely regarded as an important technical signal for traders and investors. The idea is that 200 days represents a full year of trading days, so the 200-day SMA serves as a barometer for overall sentiment for a stock.
When a stock is trading above its 200-day SMA, it can signal that it is overbought and ready to move lower. Conversely, when a stock is trading below its 200-day moving average, it can signal that it is ready to move higher.
