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)

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

Death Cross (Bearish)

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

How It Works

1. cross_above(sma(50), sma(200)) - 50-day just crossed above 200-day
2. 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

Copycross_above(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

Copycross_above(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

Copycross_above(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)

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

• EMAs react faster than SMAs
• Earlier signals but more whipsaws

Example Columns to Add

CopyPrice: 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)

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

Aggressive (Immediate Entry)

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

Anticipatory (Before Cross)

1. Watch for 50-MA approaching 200-MA
2. When within 1-2%, monitor daily
3. Enter when cross occurs
4. 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

1. Assuming it's foolproof - Can fail in choppy markets
2. No stop loss - Even golden crosses fail sometimes
3. Entering late - Best entry is early, not after 10% run
4. Ignoring market context - Individual stocks follow market
5. Overtrading - Only a few good signals per year per stock
6. 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

Copycross_above(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

Copycross_above(sma(50), sma(200)) and c > sma(50) and macd() > macd_signal()

MACD confirms momentum shift

Golden Cross + Fundamentals

Copycross_above(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:

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

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

Related Strategies

• 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.