What is a death cross?

The "death cross" is a market chart pattern reflecting recent price weakness. It refers to the drop of a short-term moving average —meaning the average of recent closing prices for a stock, stock index, commodity or cryptocurrency over a set period of time—below a longer-term moving average.

Is the death cross a bullish indicator?

The opposite of the death cross is the so-called golden cross, when the short-term moving average of a stock or index moves above its longer-term moving average. Many investors view this pattern as a bullish indicator, even though the death cross was typically followed by the bigger gains in recent years.

Is the death cross a market milestone?

Despite its ominous name, the death cross is not a market milestone worth dreading. Market history suggests it tends to precede a near-term rebound with above-average returns. The death cross appears on a chart when a stock’s short-term moving average, usually the 50-day, crosses below its long-term moving average, usually the 200-day.

Is a death cross a good signal?

The death cross makes for snappy headlines but in recent years it has been a better signal of a short-term bottom in sentiment than of an onset of a bear market or recession. A death cross is a chart pattern that occurs when a security's short-term moving average drops below its longer-term moving average.