Tuesday, February 14, 2012

Golden cross

As long-term indicators carry more weight, the Golden Cross indicates a bull market on the horizon and is reinforced by high trading volumes. Additionally, the long-term moving average becomes the new support level in the rising market. Technicians might see this cross as a sign that the market has turned in favor of the stock.
A crossover involving a security's short-term moving average(such as 50-day moving average) breaking above its long-term moving average (such as 200-day moving average) or resistance level.
--S&P 500's 50-day moving average crosses above 200-day moving average
--'Golden cross' is thought to mark transition to bull market
--Previous golden crosses preceded material gains over next two months

The Standard & Poor's Composite Index of 500 stocks posted its biggest January point gain in its history. But what may be technically more important for the longer-term outlook is that the S&P 500's 50-day moving average, or 50 DMA, crossed above the 200 DMA for the first time since Aug. 11, 2011.

Many chart watchers believe this technical event--referred to as a "golden cross"--marks the spot when a bounce within a bear market transitions to a bull market. I being a technical analyst have noted that "all sustained bull markets by definition come with the 50 DMA above the 200 DMA."

Just closely watching if Nifty and Sensex forms Golden Cross ?

Thanking you

Atul Sikrai
Sr Vice President & Head Equities
wiTdom investment advisory.