‘Death Cross’ spooks traders despite stocks soaring on cooling inflation: Dow’s 50-day average drops below the 200-day line in grim chart pattern that signals a looming crash

• A ‘Death Cross’ appeared on Dow Jones Industrial Average on Monday
• The ominous sign is often an indicator of a downturn in the market
• The pattern has appeared before major crashes including 1929, 1938, 1974 and 2008 

By BETHAN SEXTON FOR DAILYMAIL.COM

An ominous ‘death cross’ has spooked traders and sparked fears the stock market could be headed for a major drop despite positive movement in the market.

The worrying sign, which has appeared before several major crashes including 2008 and 1929, is generally taken as an indicator the market is heading for a downturn.

The last time it appeared was March 2022, when the markets plunged a massive 12 percent over six months.Continue watchingBiden meets Xi Jinping in San Francisco for high-stakes talksafter the ad

It was noted on the Dow Jones Industrial Average on Monday, the day before the markets saw their strongest performance since April – hitting their highest close since September 14 after being buoyed by the Labor Department’s latest inflation figures.

A ‘death cross’ is when the 50-day moving average of an index drops below the 200-day average – indicating momentum is weakening. A moving average is the average range of prices of an asset over a given period of time.+6View gallery

Traders have been spooked by the appearance of a ‘death cross’ on the Dow Jones Industrial Average, which can often appear before a downturn in the market+6View gallery

Death Crosses have been noted ahead of several big historic crashes including those of 1929, 1938, 1974 and 2008+6View gallery

The Dow Jones index has jumped 4.44 percent in six months, while the S&P 500 soared 8.69 percent following the news the annual rate of inflation fell slightly to 3.2 percentTRENDINGBenefit claimants who refuse to seek work will lose free prescriptions71k viewing nowJeremy Hunt ‘is poised to cut inheritance tax in Autumn statement’51.2k viewing nowChancellor Jeremy Hunt is expected to cut inheritance tax1.3k viewing now

The pattern effectively tells investors that prices have deteriorated in a short period of time. It is ‘understood to signal a decisive downturn in the market,’ according to Investopedia. 

The Dow Jones index has jumped 4.44 percent in six months, while the S&P 500 soared 8.69 percent following the news the annual rate of inflation fell slightly to 3.2 percent. 

Investors are hopeful the cooling of consumer prices signals an end to the Federal Reserve‘s aggressive interest rates hike that currently sits at a 22-year high of between 5.25 and 5.5 percent.

However, the appearance of the ‘death cross’ has worried experts as it indicates a decline in short-term momentum and a trend toward lower prices. 

It can also be a red flag for a transition from a bull market to a bear market – which is when stocks experience a period of prolonged decline, encouraging sales.

Strategist David Rosenberg, president of Rosenberg Research, warned last month the Dow Jones was ‘at serious risk now of experiencing the uber-bearish ‘Death Cross.’

Analysts also pointed out a ‘death cross’ has appeared before many major historic downturns.

The death cross seen in January 2008 ahead of the financial crisis saw the blue chip gauge plummet by 30 percent over the next 12 months.

The same pattern was noted ahead of the 1929 crash before the three year bear market of the 1930s, which saw the S&P slump 83.4 percent. …….More Here

Click here for reuse options!
Copyright 2023 Hiram's 1555 Blog