The Golden Death Cross

On my last post I looked at gold in terms of the long monthly cycle trough and the weekly or intermediate cycle trough occurring at the same time and observing – the last time this occurred was in mid 2009.

I see this AM a talking head at BNN was discussing gold and a pending “Death Cross” – which in technical lingo is very scary event. A death cross occurs when a security's short term moving average (a 50-day) turns down and below a longer term moving average (a 200 day). Conversely a golden cross occurs when a security's short term moving average (a 50-day) turns up and above a longer term moving average (a 200 day).

I did several studies on golden and death cross trades involving stocks and indices. The signals bat 50/50. I other words by the time the cross occurs – we are half way into the move – up or down. This technical myth is obvious on the chart of the GLD displaying a pending very late sell signal.