Sunday, December 13, 2015

The Golden Cross

Now, I want to talk about this interesting technical formation that we call a Golden Cross. It’s a crossover of the S&P 500, where the 50-day moving average moves up through the 200-day moving average coming up from the bottom.

Now, this is a long and widely used technical pattern that technical traders have looked at for many, many years. And it’s not the beginning of a bull market. What it does is it confirms the bull market, or it confirms that the uptrend, if you will, is well entrenched.

This I calculated way back in the middle of November that would probably occur in the middle of December. Well, now, we’re getting a lot closer to the middle of December, and it looks like it’s still going to happen, right around that time. Interestingly enough, it’s going to happen right around the same time as the Fed meeting. So we’ve got potentially two large catalysts that could push the market higher for the remaining two weeks of the year. So keep your eye out on that.

Now, the last time there was a Golden Cross, which lasted about three and a half years, the market moved up about 49%. Now, that doesn’t mean it’s going to happen this time because we all know past performance is no guarantee of future results, but when technical traders step in, it does tend to push the market a little higher, and we’re probably going to see that in the middle of December.

-- Randy Frederick, 12/8/15

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