— Mr. 🦊 CMT (@topstockcharts) March 29, 2020
Today’s Chart of the Day was shared on Twitter by @topstockcharts. The S&P 500 experienced an infamous “death cross” today. A death cross is one of the first concepts they teach you in technical analysis kindergarten. It occurs when the 50-day moving average crosses below the 200-day moving average. Despite its popularity, there’s a lot of debate among technicians over its effectiveness. It has produced several false signals in the past decade, and many argue that the majority of the damage is usually done by the time it triggers. On the other hand, it acted as a prescient sell signal in past bear markets, such as 2001 and 2008. In short, the death cross has a questionable track record, and it’s not as ominous as the name suggests. However, it’s also not something to scoff at. Like most other indicators and signals, the death cross should be taken into consideration along with other evidence. For more on this, check out this piece that examines the signal’s track record.