You may think that after the SPX has had a rip roaring 21% gain in just three months that it could be due for a significant drop. Wrong again bears!
On 3/29/19 the 200 day Simple Moving Average (SMA) was at 2756. The 50 day SMA was at 2755. If the 50 day SMA crosses above the 200 day SMA its called a Gold or Golden Cross.
Why is this important? Since the major SPX bottom made in March 2009 there have been only five Gold Cross signals, of the five only one failed to cue a significant rally. This happened in December 2015 when after the Gold Cross the SPX rallied only one week then went down until February 2016. Of the four successful signals, the best was in January 2012. The SPX then rallied 69% into May 2015 before a significant peak occurred. The least successful signal was 22% from October 2010 to May 2011
In addition to this quantitative evidence you need to understand what the other traders are doing, in particular the stock fund managers. First, they gauge their performance off of what the SPX is doing - this is one of the reasons why the SPX 200 day SMA is very important. Second, not all fund managers are equal. The best managers were probably loading up on long positions from mid December 2018 to mid January 2019. The poor/mediocre managers were probably selling or hedging, then there's a big SPX rally and they are now under performing. April 1, 2019 is the start of the new quarter, the poor/mediocre managers that will probably use a Gold Cross to buy stocks in the hope of redeeming themselves in the second quarter.
Assuming there's a Gold Cross on 4/1/19 the probability of a multi-month rally is 80%. If this next possible rally is only half as strong as the 22% from the October 2010 signal - the SPX could rally another 11% beyond 2756. This targets SPX 3060 which is very close to 3047, the major Fibonacci resistance I have mentioned in my posts since early 2018.
There's no significant Fibonacci or Chart resistance on the SPX until the all-time high at 2940 the path of least resistance is up. US stocks are seasonally bullish until early May.
BE ON THE ALERT FOR AN SPX GOLD CROSS!
Mark
On 3/29/19 the 200 day Simple Moving Average (SMA) was at 2756. The 50 day SMA was at 2755. If the 50 day SMA crosses above the 200 day SMA its called a Gold or Golden Cross.
Why is this important? Since the major SPX bottom made in March 2009 there have been only five Gold Cross signals, of the five only one failed to cue a significant rally. This happened in December 2015 when after the Gold Cross the SPX rallied only one week then went down until February 2016. Of the four successful signals, the best was in January 2012. The SPX then rallied 69% into May 2015 before a significant peak occurred. The least successful signal was 22% from October 2010 to May 2011
In addition to this quantitative evidence you need to understand what the other traders are doing, in particular the stock fund managers. First, they gauge their performance off of what the SPX is doing - this is one of the reasons why the SPX 200 day SMA is very important. Second, not all fund managers are equal. The best managers were probably loading up on long positions from mid December 2018 to mid January 2019. The poor/mediocre managers were probably selling or hedging, then there's a big SPX rally and they are now under performing. April 1, 2019 is the start of the new quarter, the poor/mediocre managers that will probably use a Gold Cross to buy stocks in the hope of redeeming themselves in the second quarter.
Assuming there's a Gold Cross on 4/1/19 the probability of a multi-month rally is 80%. If this next possible rally is only half as strong as the 22% from the October 2010 signal - the SPX could rally another 11% beyond 2756. This targets SPX 3060 which is very close to 3047, the major Fibonacci resistance I have mentioned in my posts since early 2018.
There's no significant Fibonacci or Chart resistance on the SPX until the all-time high at 2940 the path of least resistance is up. US stocks are seasonally bullish until early May.
BE ON THE ALERT FOR AN SPX GOLD CROSS!
Mark