Behold the Golden Cross’ glittering track record!

http://blogs.wsj.com/marketbeat/2012/02/01/behold-the-golden-cross-glittering-track-record/?mod=wsj_share_twitter

Okay, okay, okay. So I understand there are some “skeptics” out there questioning the “legitimacy” of employing the technical signals known as the “Golden Cross” and the “Death Cross” to predict future stock movements. Well, we here at MarketBeat are here to satisfy your appetite for intellectual rigor and numerical evidence. That’s why we’re happy to reproduce below the work of Randy Frederick, managing director of trading and derivatives at Charles Schwab.

With little more than a calendar and a pocket calculator, Mr. Frederick has identified 31 instances, since 1950, of the “Golden Cross” and another 32 appearances by its nefarious twin brother the “Death Cross.”

Drawing upon that hefty stack of examples, we can come to two conclusions: the Death Cross has basically come up as a dud of an apocalyptic warning bell, while the Golden Cross emerges, um, well, shining. In the 12 months following each of its 32 macabre manifestations, the Death Cross has spooked investors to an average gain on the S&P 500 of 3.8%. Not very scary. Its glittery counterpart, on the other hand, has proved itself much more reliable, not to mention encouraging: the S&P 500 has posted an average gain of 10.2%, post-Golden Cross sighting.

But that’s all ancient history, you say! Mr. Frederick has a rebuttal for that too. In the post-2003 period, Mr. Frederick counts just five instances of each cross pattern. And ta-da, the Golden Cross proves its mettle again, averaging a 10.1% gain, while the Death Cross again fails to inspire fear, with a less-than-creepy 6% advance.

What does it all mean, you say? It means this: if you had shorted the market post-Death Cross, you probably lost money (to the tune of about 3.1%, says Mr. Frederick). But following the Golden Cross would make your portfolio fatter by about 8.6%.

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thanks to mattr for the link..

heres your good news story for he week..the golden cross never fails and its here..so go long..if you dare!

the golden cross..and a picture of guy carrying a cross like jesus..symbolism eh?

401

~ by seeker401 on February 3, 2012.