Is the Death Cross Really Deadly?

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There has been a lot of talk, lately, about an impending death crosses – where the 50-day moving average drops below the 200-day moving average. It’s supposed to be a harbinger of severe bear markets. Yes, the S&P 500 is about to do this (the white arrow below.)

And, it’s possible that it will add to the bearish pressures on stocks. It’s also possible that it will mark a bottom.

Sure, in 2008 a death cross was followed by a long, protracted bear market.

But, in 2020, the damage had already been done and SPX was well off its lows and on its way to new highs.

It would be easier to be afraid of a death cross if the Fed and other central banks weren’t so involved in propping up markets – something they’ve greatly perfected since 2008. We’ll look at the case for/against it making a difference.

continued for members…

First, note that VIX broke down as we discussed yesterday.

And, on the back of rumors that Putin said something or other, ES has completed a little IH&S that targets the SMA200. Like SPX, if it plays out then the well-formed falling red channel will be violated……and the red TL we talked about on SPX’s RSI will be broken to the upside. So, it all boils down to whether ES can hold 4280 – the neckline of that little IH&S.