xjo survival guide to 2012 wednesday, page-35

Here's some light on the importance of the Golden Cross from Mary Bartels (Bank of America). (Note - a woman - they make better traders). This was written on 29 June, 2010.

"June 23, 2010 marked the 1-year anniversary of last June’s bullish Golden Cross of the 50-day moving average above the 200-day moving average. This Golden Cross signal preceded a 12-month return of 22.4% on the S&P 500. The average 12-month return for the 42 Golden Crosses that have occurred since 1928 is 9.6%. More importantly, the June 23, 2009 signal occurred during the NBER recession that began in December 2007 and Golden Crosses associated with recessions show a much stronger average 12-month return of 19.5%. The average 12-month return for the S&P 500 over the same period is 7.2%.[...]"

Anybody taking a Golden Cross signal as an immediate signal to buy is just plain silly. They invariably occur when the market is overbought.

But the Golden Cross does alert one to the context in which the market is operating - a bullish one. Buy the dips rather than sell the rallies.

That's just a very broad context within to work - for medium to long term traders.

Most people here work on much shorter time frames. So ... just ignore the Golden Cross.

Redbacka