Well, apparently the bear market is over. The Golden Cross is upon us. All is well in the world and CNBS and their happy little mouth pieces can report the great news. Surely the Golden Cross will occur and drive the VIX under 30 and all will be right in the world of finance.
First a recap of the current situation.
Let's get ready to RUMBLLLLLLE. We have a challenger to the Golden (Boy) Cross. In the red corner weighing a ton is the primary channel of the /ES. As seen below, this channel is well established. Can it withstand a beating from the Golden Boy? The futures have an ally in the indicators on their side. The daily and weeklys are headed south and will assist in the corner. I assume it will be a good fight. Could not locate Vegas odds.
But wait there are two more challengers looming in the path of the Golden Boy's ascent to the title if the channel should fail. The trendline twins lie just above along with historical 954 and 1007 resistance. The futures were possibly (YTBD) no match, but in a more fair SPX vs. SPX fight the trendlines twins will prevail. In the below chart if resistance and double top at 954 is over run, the pink and blue trendlines lie waiting for a good fight. Aiding these trendlines vs. the Golden Boy will be all of the atrocities that our government has done to fix the problems since the RE bubble was put into action and the residual effects of a world in peril. A virtually undefeatable combination. See my last post - It's Only Gonna Get Worse From Here for more ammo fighting the Golden Boy.
The web is kind of quiet on the Golden Cross issue right now. The studies I am reading vary. Some are bullish and sound like CNBS cheerleaders on acid, so I am not presenting those. The more neutral reports on the subject follow. Bottom line, it's historically not that big a deal when the 200ma is in a solid downtrend.
The MarketSci blog has done some good work analyzing the Golden Cross. The following links have several blogs on the subject all worth reading.
MarketSci Blog - Testing the Rare Downtrending Golden Cross.
MarketSci Blog - Moving Average Crossovers Debunked?
MarketSci Blog - Which Golden Cross is the Best Golden Cross?
Pragmatic Capitalist has this - USING THE 200 DMA AS A BUY/SELL SIGNAL
Only time will tell, and if there is a severe move south, this will all be for nothing. Remember they have not crossed yet.