S&P's 50-Day Cross of 200-Day

S&P 500's 50-Day Cross of the 200-Day

By Bespoke Investment Group | 22 December 2007

The S&P 500's 50-day moving average crossed below its 200-day moving average today, which is a big no-no for technicians. Earlier this week, we highlighted that the index has typically performed poorly in the month and quarter following a similar 50/200-day cross. Click here to view our prior post. While the market did okay after the last time it happened in July 2006, the average returns following this 50/200-day negative cross aren't pretty.

A 50-day cross below the S&P 500's 200-day has happened 36 times since 1940. The average change of the S&P 500 in the month following this cross has been -0.76%, while the average change over the next 3 months has been -0.01%. These numbers are very negative when taking into account that the average 1-month change during any period since 1940 has been +0.66% and the average 3-month change during any period has been +2%.

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Normxxx    
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