A significant event – perhaps very significant – took place in the market last week, yet it has gone under most of the radar I look at. The S&P500 completed a fairly rare “Golden Cross.” What is a Golden Cross, you ask? Well, Merrill Lynch’s technical analyst, Mary Ann Bartels, did some great work on Golden Crosses. Herewith some of her findings:
Here’s a look at the S&P500 and the Golden Cross:
Now, you can get a Golden Cross under a wide variety of scenarios. As it happens, we got one this week under the best possible circumstances:
Here’s the performance of the S&P500 after a Golden Cross associated with an NBER-declared recession:
As sanguine as I am about the prospects for a robust, sustainable recovery, the facts are the facts, and the track record of the Golden Cross is impressive indeed. There's much more to Bartels' report (and Birinyi did some work on it this week, too), but the point simply needs to be made that this is, from a technical perspective, a rather meaningful event.