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Dow chart flashes bullish 'golden cross' just 3 months after a bearish 'death cross'



A bullish "golden cross" pattern is set to appear in the Dow Jones Industrial Average chart, suggesting a new long-term uptrend has begun, exactly three months after the opposite "death cross" warned of a downtrend. ] A 'golden cross' chart pattern occurs when the 50-day moving average (DMA), viewed by many as a shorter term trend tracker, rises above the 200-DMA, which is seen as a longer-term trend divider. Many technicians believe the crossover marks the spot and the shorter term rally transitions to a longer-term uptrend

On Tuesday, the Dow's

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     DJIA, + 0.09%

50-DMA rose to 25,1

80.95 in intraday trade from 25,128.34 on Monday, while the 200-DMA rose to 25,166.55 from 25,158.32, according to FactSet data. 148 points in midday trade. That has raised the index to within 765 points, or 2.9%, of its Oct. 3, 2018 record close of 26,828.39

That would erase the negative technical effects of the death cross, when the 50-DMA fell below the 200-DMA on Dec. 19, 2018.

The Dow dropped over 1,500 points, or 6.6%, to a 15-month low in three days after that death cross, but the Dow is currently 11.7% higher than it was three months ago

Golden and death crosses are not always good timing signals, as they are usually telegraphed well in advance. They can, however, act as a reminder that the recent market trends have lasted long enough and traveled far enough to be considered more than just a typical bounce or pullback

See related : The Dow is on the verge of a bullish golden cross, but stock-market analysts are not exactly cheering

FactSet, MarketWatch

16, 2016, or 66 trading sessions after the previous death cross. The blue-chip barometer rallied nearly 5,300 points, or 29%, until the appearance of the next death cross

The following are the previous Dow's golden crosses over the last 10 years, the number of trading sessions that they appeared after Trading days after the previous death cross Dow performance until the next death cross Trading days until the next death cross the next death cross appeared April 16, 2016 66 + 29% 673 Dec. 17, 2015 90 -7.7% 17 Jan. 3, 2012 90 + 40.4% 906 Oct. 1, 2010 61 + 4.5% 226 July 2, 2009 377 + 21.0% 254 Source: FactSet, MarketWatch the Dow, the stock charts of 16 of 30 components have 50-DMAs that are above 200-DMAs

Meanwhile, the S & P 500 Index

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     SPX, + 0.15%

is about six or seven sessions away from producing a golden cross based on current trajectories of its 50-DMA and 200-DMA, while the Nasdaq Composite Index

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     COMP, + 0.35%

is about nine sessions shy

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