ZLBT Chats

Monday, October 25, 2010

ZLBT's Chart Of The Week >>> The S&P 500 Golden Cross

The SPX Harami Nailed A Golden Cross
Last July 1 we had the "death cross" on the S&P 500 Index (SPX). That's when the 50-day moving average crosses below the 200-day moving average. This is often portrayed as a bearish signal for the market. Nevertheless, the market has rallied since then and we just had a "golden cross."

That, as you may have guessed, is the opposite of a death cross. It's when the 50-day crosses above the 200-day. The SPX chart on the left shows the golden and death crosses on the S&P 500 since 2000.

While some of the death crosses marked a mere pullback, all the golden crosses have been bullish for the market. However, history is not always a good predictor for the market and there is a more important aspect of this that I'll talk about next.

Post Death Cross Rally >>> To hell and back ....
The emphasis of a rebound after the death cross is amplified spontaenously by the appearance of a Harami Cross followed by a Harami a couple of weeks later. Haramis are trend turners and they are especially potent when appearing at the lows. It usually leads to a formidable rebound and possibly a mini rally as follow-up.

The rally did happened, as the market is up almost 15% since the death cross on the 1st July. Now the 50-day moving average has overtaken the 200-day to complete the golden cross. And if the rally can sustain itself for the immediate term, I'm putting my money on the SMA 100 to deliver another "you-know-what".

Unlike the July death cross, which everyone was talking about by the time it happened, I've hardly seen anything discussing the impending golden cross or it's potential appearance, say, 30 days ago? Monitor the media & analysts news flow amd commentariesmy take or theirs these coming weeks? It will be interesting ...
Hey these are awesomely pro analysts from Wall Street while I'm just a TauFooFah seller from Petaling Street LOL!!!!!

Wrapping It Up
The golden cross typically signals good returns in the near future. More importantly, this bullish phenomenon is being completely ignored. Four months ago, when the death cross occurred, there was a barrage of articles asserting it confirmed a looming market crash.
I haven't heard a peep about the golden cross happening right now.
It seems no one is pointing to this bullish news because no one believes a rally is imminent. This lack of belief has bullish implications for the market. It suggests bad news is priced into the market already so there are a lot of people standing on the sidelines.

As this market continues to rally investors will come to believe or have no choice but to submit and begin buying. The inflow of sideline money can sustain this rally for a long time.
Don't be late getting in.

Irrespective or not whether you are buying this Golden Cross >>>
Ready or Not, Next Comes Third-Quarter GDP LOL!!!

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