From the desk of Willie Delwiche.
It has an ominous name, but not much of a signal. The so-called “Death Cross” occurs when the 50-day average closes below the 200-day average. Today, for the 25th time since 1970, that will happen for the S&P 500. This table shows both where the S&P 500 tends to be in relation to its peak when these Death Crosses have occurred in the past and the experience of the index in the wake of past crosses.
In aggregate, forward returns following Death Crosses are not meaningfully different from any random day in the market over the past 50 years. This is more noise than news and these crosses mostly reflect an index that has pulled back from its peak. The S&P 500 is currently 13% below its January peak, which puts the current Death Cross in line with the historical pattern. The relationship between the 50-day average and the 200-day average describes an environment but is not likely to shape the path going forward.
