Wednesday, October 20, 2010

Babak on the Golden Cross

The "death cross" got a lot of press this summer. Now that the opposite is happening, not so much. Over at Traders Narrative, Babak has an entry about the "golden cross" (link).

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... it is important to remember that these patterns hold true on average - not every single time. Like seasonality or the presidential cycle, they hold powerful sway over the market but are never to be considered as a dictatorial mandate.

As well, according to a study done by Jason Goepfert, when we have similar back-to-back signals - that is reversing a “death cross” with a “golden cross” within a 3 month period. The results are lackluster, showing that within a year the S&P 500 index is slightly higher (+1.4%) with a 60% positive occurrence.
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