The S&P 500 Index (SPX) Joins The 'Death Cross' Party

Does the S&P 500 Index's (SPX) death cross tell us anything about where the market might go?

by Josh Selway

Published on Aug 28, 2015 at 3:02 PM

First, it was the Dow. Then came the Russell 2000 Index (RUT), which was followed by Apple Inc. (NASDAQ:AAPL). Now, it's the S&P 500 Index's (SPX) turn for a "death cross," with the 50-day moving average crossing below the 200-day trendline today. Courtesy of Schaeffer's Senior Quantitative Analyst Rocky White, the data below provides insight on how the broad-market barometer tends to react after a death cross has occurred. 

150828Death

From the above data, we can see how the SPX has historically struggled in the immediate aftermath a death cross signal -- averaging a one-month loss of 0.7%, and positive less than half the time. This, versus a one-month anytime return of 0.7% for the SPX, which is positive 61% of the time. However, the average SPX return gets better the further removed it is from a signal. 


The real concern arises when looking at the longer-term returns for the SPX in the wake of a the death cross. Going out a full year, the SPX has averaged an 8.86% anytime return, compared to just a 3.94% return post-death cross. Meanwhile, it should be noted that the SPX has come out positive 69% of the time after a signal, going out a year -- not much lower than the comparative anytime figure of 73%. 

Below you can find a full list of the S&P 500 Index death crosses since 1950. There have been 32 total, with the most recent in August 2011. 

150828SPXDEATH


A Schaeffer's exclusive

TOP STOCK PICKS 2020

Access your FREE insider report before it's too late!


 
 

Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


IRA/401k: The Crash-Proof Retirement Plan
Use gold to protect any IRA, 401(k), or retirement account from a looming financial crisis.
Stocks Eye Notable Weekly Gains on 3-Day Surge
Stocks are eyeing big weekly gains
WW Stock Brushes Off Bull Note
Morgan Stanley upgraded the Weight Watchers parent to "overweight" from "equal weight"
IRA/401k: The Crash-Proof Retirement Plan
Use gold to protect any IRA, 401(k), or retirement account from a looming financial crisis.