The S&P 500 achieved its first “golden cross” in 2½ years, but that doesn’t mean stocks are destined for more gains in 2023. The golden-cross indicator is used by technical analysts as a sign that a particular upward trend in markets or currencies is gaining momentum.
After the close on Thursday, the 50-day moving average for the S&P 500 stood at 3,953.61, a hair higher than the 200-day moving average, 3,951.58. This marks the first time this pattern has appeared since July, 2020, according to FactSet data. What does this mean for investors? Historical market data show golden crosses often precede further gains for stocks over the following six months, or a year. But not always. The S&P 500 has seen 52 golden crosses since 1930, according to Dow Jones Market Data, which used back-tested data to account for the index’s performance prior to its creation in 1957. In that time, stocks were trading higher one year later 71% of the time. However, there have been some notable exceptions during periods of heightened volatility. The S&P 500
SPX,
+1.47%
declined during the 12 months that followed the golden cross that occurred on April 1, 2019, according to Dow Jones Market Data. This happened again in 1999 as the dot-com bubble burst, and also following a golden cross that occurred in1986, preceding the “Black Monday” crash. Other indexes have seen golden crosses in recent months. The Dow Jones Industrial Average
DJIA,
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