A bullish "golden cross" pattern appears in the Dow Jones Industrial Average chart, suggesting that a new longer-term uptrend has begun, exactly three months after the opposite "death cross" warned of a downtrend.
A "Golden Cross" chart occurs when the 50-day moving average (DMA), which many consider a short-term trend tracker, rises above the 200-DMA value, which is considered a longer-term trend splitter , Many technicians believe the crossover is the spot for a shorter-term transition to a longer-term uptrend.
On Tuesday the Dow
50-DMA rose from 25,1
The Dow fell by 19 points in afternoon trade already earlier gains of 196 points. This has raised the index to 934 points or 3.6% of its record-breaking October 3, 2018, from 26,828.39.
This would wipe out the negative technical effects of the Cross of Death if the 50-DMA fell below 200 -DMA on December 19, 2018.
The Dow sank by over 1,500 points or 6 within three days of this death cross , 6% to a 15-month low, but the Dow is currently 11.7% higher than three months
Golden and death crosses are not always good market-time signals as they are usually telegraphed long in advance. However, you can recall that recent market trends lasted long enough and traveled far enough to be more than just a typical jump or retreat.
See Related : The Dow is on the verge of a bullish golden cross, but stock market analysts are not exactly cheering.
The Dow's latest golden cross appeared in April 16, 2016, or 66 trading sessions after the last death cross. The blue-chip barometer recorded nearly 5,300 points or 29% until the appearance of the next death cross.
The following are the Dow's previous golden crosses listed in the last 10 years, the number of trading sessions after which they issued previous death crosses and the performance of the Dow and the trading days until the next death cross:
|Golden Cross||Trading days after the previous death cross appeared||Dow Performance until the next death cross||Trading days until the next death cross appeared|
|16. April 2016||66||+ 29%||673|
|Dec. 17, 2015||90||-7.7%||17|
|Jan. 3, 2012||90||+ 40.4%||906|
|Oct. 1, 2010||61||+ 4.5%||226|
|2. July 2009||377||+ 21.0%||254|
|Source: FactSet, MarketWatch|
Within the Dow, the stock charts of 16 out of 30 components have 50-DMAs over the 200-DMAs lie.
Meanwhile, the S & P 500 index
is about six or seven sessions away from producing a golden cross, based on the current trajectories of its 50-DMA and 200-DMA, while the Nasdaq Composite Index
is about nine sessions too short.
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