Golden Cross & Death Cross

What It Detects

Golden Cross: 50-day MA crosses above 200-day MA (bullish)
Death Cross: 50-day MA crosses below 200-day MA (bearish)

These are major long-term trend change signals watched by institutional investors.

The Formulas

Golden Cross (Bullish)

cross_up(sma(50), sma(200)) and c > sma(50)

Death Cross (Bearish)

cross_down(sma(50), sma(200)) and c < sma(50)

How It Works

cross_up(sma(50), sma(200)) - 50-day just crossed above 200-day
c > sma(50) - Price confirms by staying above 50-day

This catches the exact crossover moment plus price confirmation.

When to Use

Best for:

Long-term investing (hold 3-12 months)
Identifying major trend changes
Low-frequency trading (few signals per year)
Retirement/long-term accounts

Avoid when:

Day trading or swing trading (too slow)
Need quick profits (setup takes months to develop)
Choppy sideways markets (false signals)

Historical Significance

Golden Cross:

Signals end of downtrend/correction
Start of sustained bull market
Often followed by 6-12 month rally
Watched by fund managers

Death Cross:

Signals end of uptrend
Start of bear market or deep correction
Often followed by 3-6 month decline
Triggers institutional selling

Parameters You Can Tweak

With Volume Confirmation

cross_up(sma(50), sma(200)) and c > sma(50) and v > sma(v, 50) * 1.2

Requires 20%+ volume increase
More reliable signal

Large Caps Only

cross_up(sma(50), sma(200)) and c > sma(50) and f.market_cap > 10B

Focus on institutional-grade stocks
Smoother trends, better follow-through

With Price Momentum

cross_up(sma(50), sma(200)) and c > sma(50) and roc(20) > 5

20-day return > 5% (momentum building)
Filters weak crosses

EMA Version (More Responsive)

cross_up(ema(50), ema(200)) and c > ema(50)

EMAs react faster than SMAs
Earlier signals but more whipsaws

Example Columns to Add

Price: c
50MA: sma(50)
200MA: sma(200)
Distance 50-200: (sma(50) - sma(200)) / sma(200) * 100
20-day Return: roc(20)
Volume Ratio: v / sma(v, 50)
RSI: rsi(14)

Entry Strategies

Conservative (Wait for Confirmation)

Golden Cross appears on scan
Wait 3-5 days for price to stay above 50-MA
Enter on first pullback to 50-MA
Stop below 50-MA
Target: 200-MA if below, or 10-20% gain

Aggressive (Immediate Entry)

Golden Cross appears
Enter at close or next morning
Stop below recent low (before cross)
Add on pullbacks to 50-MA

Anticipatory (Before Cross)

Watch for 50-MA approaching 200-MA
When within 1-2%, monitor daily
Enter when cross occurs
Get in before late momentum buyers

Exit Strategies

For Golden Cross Longs:

Death Cross appears (50 crosses below 200)
Price breaks below 200-day MA
RSI reaches 70+ and diverges
Target hit (10-20% depending on timeframe)

For Death Cross Shorts:

Golden Cross appears
Price breaks above 200-day MA
RSI reaches 30- and diverges
Cover at 200-day MA test

Signal Quality

High Quality Golden Cross

Preceded by months of consolidation
50-MA was well below 200-MA (big move coming)
Volume increasing on up days
Market (SPY) also in uptrend
Sector showing strength

Low Quality Golden Cross

Choppy back-and-forth near crossover
Small separation (< 2%) between MAs
Low volume
Market in downtrend
Sector weak

Same criteria apply to Death Cross (inverse)

What to Watch For

Strong Golden Cross signals:

First golden cross after long bear market
50-MA was 10%+ below 200-MA
Price making higher lows during setup
Both MAs sloping up

Warning signs:

Immediate golden cross after death cross (whipsaw)
Flat 200-day MA (sideways market)
Volume declining
Resistance levels nearby

Common Mistakes

Assuming it's foolproof - Can fail in choppy markets
No stop loss - Even golden crosses fail sometimes
Entering late - Best entry is early, not after 10% run
Ignoring market context - Individual stocks follow market
Overtrading - Only a few good signals per year per stock
Not waiting for confirmation - Price should hold above 50-MA

Famous Examples

Historical Golden Crosses

SPY March 2009: Bottom of financial crisis → 200%+ rally
AAPL Feb 2019: After Christmas selloff → 100%+ gain in 2 years
TSLA Dec 2019: Before massive 2020 rally

Historical Death Crosses

SPY Dec 2007: Start of financial crisis → 50% decline
SPY Mar 2020: COVID crash signal
Often comes late but confirms trend change

Timeframe Considerations

Daily Charts (Standard)

Hold 3-12 months
Use 50/200-day MAs
Best for swing/position trading

Weekly Charts (Very Long-term)

Hold 1-5 years
Use 50/200-week MAs
For retirement accounts
Very few but highest quality signals

Intraday (Not Recommended)

Moving averages too noisy
Use other indicators for day trading

Combining with Other Indicators

Golden Cross + RSI

cross_up(sma(50), sma(200)) and c > sma(50) and rsi(14) > 50 and rsi(14) < 65

RSI shows momentum without being overbought

Golden Cross + MACD

cross_up(sma(50), sma(200)) and c > sma(50) and macd_line(12, 26) > macd_signal(12, 26, 9)

MACD confirms momentum shift

Golden Cross + Fundamentals

cross_up(sma(50), sma(200)) and c > sma(50) and pe > 0 and pe < 25

Add P/E filter for profitable, reasonably valued stocks

Market Filter (Critical!)

Trade golden crosses when:

SPY has golden cross
SPY above its 200-day MA
VIX < 25 (low volatility)

Avoid golden crosses when:

SPY has death cross
SPY below 200-day MA
VIX > 30 (high volatility)

Individual stock signals work best when market cooperates.

Sector Rotation

Golden crosses often occur in groups:

Early cycle: Financials, Tech
Mid cycle: Industrials, Materials
Late cycle: Energy, Consumer Discretionary
Defensive: Utilities, Consumer Staples (before market tops)

Watch which sectors are forming golden crosses = identifies cycle phase.

Momentum Breakout - Shorter-term version
Trend Strength - Multiple MA alignment
MACD Crossover - Earlier momentum signal

Pro Tips

Be patient: Setup takes 3-6 months to develop
Don't chase: Wait for pullback if you missed initial cross
Market first: Check SPY golden/death cross before individual stocks
Historical check: See how stock behaved after previous crosses
Position sizing: Go larger on high-quality crosses (rare opportunity)
Portfolio approach: Buy 5-10 golden cross stocks, hold basket
Death cross shorts: Only for experienced traders (short selling is hard)
200-MA is key: Price above 200 = bull, below = bear (simple but powerful)

Backtesting Insights

Studies show:

Golden Cross: 60-70% success rate in bull markets, 40-50% in bear markets
Best performance: When preceded by 6+ months consolidation
Average gain: 10-30% over 6-12 months after cross
Lagging indicator: Often 10-20% of move already happened by crossover

Use as confirmation of trend change, not prediction.