Golden cross and death cross

What the crosses are

Two moving averages on the same price, a short one and a long one. When the price rises for a while, the short average goes above the long one. That is called a golden cross. When the price falls, the short one goes under the long one. That is called a death cross. The usual pair is 50 and 200 days.

Here are the latest five on the S&P 500. The index counts without dividends.

How often they come

Among the 20 largest US companies since 2000 we counted 298 golden crosses and 297 death crosses, at most one per company and month. A company has on average about 9 months between two crosses. They aren't rare events, even if headlines can make them sound that way.

The crosses come late

Because both lines are averages of old prices, the cross happens long after the price has turned.

• By the death cross, the stock in the middle case had already fallen 17% from its high of the last six months.
• By the golden cross, the stock in the middle case had already risen 25% from its low of the last six months.

So the cross doesn't say something is about to begin, but that something has already been going on for a while.

It can also change quickly. Within three months, 39% of death crosses were followed by a golden cross, and 19% of golden crosses by a death cross.

Do they hold up?

The names promise something about what happens next. We have tested that on large Swedish companies and on the S&P 500, along with RSI and MACD, in the study Does technical analysis work?. The numbers are there.