The Dow Jones is seeing its first bearish “death cross” since March 2022

Posted: November 13, 2023 at 4:57 PM ET

The Dow Jones Industrial Average hit its first “death cross” since March 2022 on Monday, in what some described as the latest ominous development for stocks as the market looks to extend its November rebound rally.

This time, two consecutive sessions in the green were not enough to keep the Dow Jones out of the death zone, as the market’s recent three-month losing streak weighed on the blue chip index’s 50-day moving average, while gains from earlier in the This year it helped strengthen the 200-day moving average.

the…

The Dow Jones Industrial Average hit its first “death cross” since March 2022 on Monday, in what some described as the latest ominous development for stocks as the market looks to extend its November rebound rally.

This time, two consecutive sessions in the green were not enough to keep the Dow Jones out of the death zone, as the market’s recent three-month losing streak weighed on the blue chip index’s 50-day moving average, while gains from earlier in the This year it helped strengthen the 200-day moving average.

The Dow Jones Industrial Average closed at 34,337.87 on Monday, according to FactSet data, rising 54.77 points, or 0.2%, to 34,337.87.

A death cross occurs when the 50-day moving average, which market technicians consider a proxy for the short-term trend of an asset, falls below the 200-day moving average, which is a proxy for the long-term trend.

Analysts had warned of an impending doom crossover for the Dow late last month, with David Rosenberg, president of Rosenberg Research, calling the prospect “extremely bearish” for stocks.

See also  Volkswagen chief calls for settlement to end Ukraine war to help EU economy

be seen: Dow Jones Is Approaching a Bearish ‘Death Cross’ Signal: What It Means for Stocks

Although typically interpreted as a bearish signal, some technicians argue that death crosses actually indicate buying opportunities during bull markets, as they have sometimes appeared near market bottoms, as MarketWatch’s Tommy Kilgore previously noted. Others say it is not a true death cross unless the 200-day moving average falls when the 50-day moving average crosses below it, which was not the case here.

Going back to 2000, the Dow Jones was up 8.1% on average one year after a death cross, and up 4.6% three months later, according to Dow Jones Market Data.

The gauge is trading higher three months later after eight of the past 10 cases, which occurred between March 2022 and the second half of 2005.

Although the Dow Jones closed higher, the S&P 500 SPX and Nasdaq Composite COMP closed lower on Monday as investors awaited the final batch of US inflation data, due Tuesday at 8:30 a.m. EST. .

The Dow is up 3.6% year to date, but is up about 20% since its closing low in late September 2022, the lowest reached during last year’s sell-off, and its lowest close overall since November 2020. .

Leave a Reply

Your email address will not be published. Required fields are marked *