First it was yield curve inversion, then it was volatility spikes. Now we have the proverbial onslaught of articles pointing to a death cross in the Russell 2000 Index and potentially other indexes in the future. Just today someone passed me a story from Marketwatch.
Now, as a market technician I love when the mainstream financial media starts talking about charts. For those unfamiliar with the death cross, it simply refers to the occurrence of the 50-day simple moving average crossing down and below the 200-day simple moving average. If the reverse happens it would be called the “Golden Cross”.
The article pointed out that its been three years since the last time it happened. The actual results of selling with a Death Cross and buying with a Golden Cross are mixed over the longer term. Part of the reason is that it takes a large move in prices to get to this point and most of the loss may have already occurred. Some technicians even point to the “death cross” as a potential buying opportunity.
We will leave this debate to others but for now why worry about what might happen or has happened. Instead, just be in the market and be hedged. Or simply Buy and Hedge!