Nvidia and 16 Other Stocks Making a Death Cross

Citron Research is a buyer of NVDA, despite its technical struggles

by Andrea Kramer

Published on Nov 20, 2018 at 1:20 PM

There's been a lot of media attention lately on "death crosses" -- when a longer-term moving average crosses above a shorter-term trendline. Typically, Wall Street considers the 50-day and 200-day moving averages for this ominous-sounding technical indicator, thought to be a predictor of bearish price action. However, below we break down what recent death crosses have really meant for equities, and list the liquid stocks -- including Nvidia Corporation (NASDAQ:NVDA) -- and exchange-traded funds (ETFs) that have experienced a death cross during the recent sell-off.

Below are the S&P 500 Index (SPX) members that have made a death cross in the past three trading sessions (since Thursday, Nov. 15), per Schaeffer's Senior Quantitative Analyst Rocky White. In addition, we list the ETFs that have made a death cross since Oct. 1. Along with FAANG names Netflix (NFLX) and Alphabet (GOOGL) is Nvidia stock, which has been battered recently with the semiconductor sector, represented by the VanEck Vectors Semiconductor ETF (SMH), which made a death cross of its own last month.

SPX stocks death crosses

ETF death crosses

NVDA's death cross occurred on Nov. 13, just days before the shares gapped lower on earnings. Today, the security fell as low as $133.31 -- a new annual low -- before turning higher on a Citron Research endorsement. Specifically, the notorious short seller said it's buying Nvidia shares, as "this is the first time in two years [the] stock offers an appealing risk-reward to investors." At last check, the shares were 3.2% higher to trade at $149.38.

NVDA stock chart nov 20

However, while NVDA's death cross did precede a massive bear gap, these technical signals haven't been nearly as bearish as they sound. Since 2016, there have been just under 1,000 death crosses on S&P stocks. On the other hand, over 1,000 SPX members have enjoyed a "golden cross" -- when the 200-day moves back below the 50-day trendline, thought to be a bullish stock indicator.

Despite their names, the death cross has actually preceded stronger price action for the underlying over the next month, compared to the golden cross. On average, SPX stocks have added 1.43% a month after death crosses, compared to just 0.56% after golden crosses. That gap is similar when considering all stocks. After those death crosses, the average one-month return was 1.8%, compared to 1.02% after a golden cross.

death crosses vs golden crosses since 2016



START YOUR SATURDAY SMARTER.


The best of Schaeffer's market analysis in a 5-minute weekly read.


 
 

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 Investment Guide: 2019 Stock Market Crash
Use gold to protect any IRA, 401(k), or retirement account from a looming financial crisis.
Dow Stock Stays Hot Amid Buyout Rumors
Tupperware suspended its quarterly common dividend last week
SunPower Stock Shines After Spin-Off
SPWR has found support at its 320-day trendline
16-Hour "Jump Trades" Unlock New Profit Potential
Click to continue to advertiser's site.