The Golden Cross

Technical analysts are atwitter this week as the S&P 500 just passed a “Golden Cross.” This is when the 50-day moving average breaks above the 200-day moving average.

This is supposed to be good for the market. Personally, I’m rather skeptical of these technical milestones. After all, the S&P 500 has already soared a good deal off its October low. It seems strange to say after a very solid rally that now is the time when things looks good.

I do pay a little attention to where the market is versus its 50- and 200-DMA. This is not for any trading guidelines but because historically the market is a trend-sensitive data set. Momentum does exist and it’s a powerful anomaly to current theory.

Posted by on January 31st, 2012 at 11:25 am

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