This morning the S&P 500 (SPY) briefly breached 1,318, forming what is called a Golden Cross which, along with lackluster economic data, has contributed to notable volatility across the U.S. indices today, as many technical traders try to assess which direction the market will go from here over the short-term.GC

A Golden Cross, in this situation, occurs when the 50-day moving average crosses and closes above the 200 day moving average over a six-month time frame (it doesn’t look like it’s going to happen today for the S&P). As long-term indicators carry more weight, the Golden Cross indicates a bull market on the horizon and is typically supported by hightrading volumes. Also, the long-term moving average becomes the new support level in the rising market.


S&P Golden Crosses have occurred 26 times since 1962, and the average three-month gain on the S&P following a Golden Cross has been 4.1%.

If the S&P fails to close above 1,318 today, some speculate that a Death Cross is on the horizon, potentially indicating a substantial short-term pullback.


Many believe the above is all just technical nonsense. However, it should be considered that history has shown that these particular technical indicators have proven to be more reliable than most.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.


Blues Comments:

Technicians might see this cross as a sign that the market has turned in favor of the stock. …

Perfect example of a Golden Cross…….check this chart out……

The 1st of the year MA(50) crossed MA(200) on the INDU……a major rally has followed….

Historically Golden Crosses are very powerful Bullish developments……

If you look @ the INDU chart you’ll see MA(100) is headed for a Cross w/ MA(200)…….

RFMK is looking very Bullish right now…….$$$