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Byline: CRAIG SHAW
Owners of leading stocks didn't have to worry about support lines for a while. Most leaders that broke out early in the current rally didn't touch their 50-day moving averages in months, let alone their 200-day lines.
As the market continues its summer consolidation, that's changing. The S&P 500 bumped against its 50-day average in late July for the first time since March 31. The benchmark index pierced the trend line Friday. Leading stocks are following suit by testing support.
Stratasys ranks No. 1 on the IBD 100 list of leading companies. But the prototyping device maker broke through its 50-day line Friday for the first time since February to close 28% off its high.
What's the 50-day average? It's an intermediate-term support line calculated by taking a stock's average daily closes over the past 10 weeks. The average is plotted graphically on a chart, showing the stock's overall trend while smoothing out day-to-day fluctuations.
Winning stocks often pause to digest gains during their big runs. When they do, they usually dip to their 50-day line. Look at charts of past leaders. Many rode ...