The Death Cross Is Here. How could it play out?
The 50-day simple moving average has crossed below the 200-day simple moving average causing a death cross. Looking at other death crosses in the past we find that:
For the dot-com bubble, the death cross appeared on 2000-10-30, we ended green for 9 more days.
For the financial crisis, the death cross appeared on 12/21/2007, we ended green for 4 more days.
Between the death cross and the golden cross:
dotcom:
2008 financial crisis:
If this pattern continues, we should expect to see our red days start between Apr 3rd and Apr 8th.
To shed some light on the reliability of the death cross as a signal, I looked into all death crosses that happened since 2000. I focused on their area between the death cross and the golden cross.
The only death crosses which were still negative during their golden cross were the dotcom bubble and 2008 financial crisis.
The other death crosses in 2004, 2006, 2011, 2015, and 2019 all had meager drops following a rally. I've plotted these here:
gyazo.com/e63c729063...0c948faaba03f15cf067
For the dot-com bubble, the death cross appeared on 2000-10-30, we ended green for 9 more days.
For the financial crisis, the death cross appeared on 12/21/2007, we ended green for 4 more days.
Between the death cross and the golden cross:
dotcom:
- Lasted: ~600 days
- Lost: -40% loss
2008 financial crisis:
- Lasted: ~300 days
- Loss: -50% loss
If this pattern continues, we should expect to see our red days start between Apr 3rd and Apr 8th.
To shed some light on the reliability of the death cross as a signal, I looked into all death crosses that happened since 2000. I focused on their area between the death cross and the golden cross.
The only death crosses which were still negative during their golden cross were the dotcom bubble and 2008 financial crisis.
The other death crosses in 2004, 2006, 2011, 2015, and 2019 all had meager drops following a rally. I've plotted these here:
gyazo.com/e63c729063...0c948faaba03f15cf067
Comment:
imgur.com/a/SgrxhjF