As of 09/17/2025
Indus: 46,018 +260.42 +0.6%
Trans: 15,502 -145.76 -0.9%
Utils: 1,086 +2.00 +0.2%
Nasdaq: 22,261 -72.63 -0.3%
S&P 500: 6,600 -6.41 -0.1%
|
YTD
+8.2%
-2.5%
+10.5%
+15.3%
+12.2%
|
 46,700 or 44,700 by 10/01/202516,700 or 15,200 by 10/01/20251,150 or 1,050 by 10/01/202522,700 or 21,400 by 10/01/20256,750 or 6,400 by 10/01/2025 |
As of 09/17/2025
Indus: 46,018 +260.42 +0.6%
Trans: 15,502 -145.76 -0.9%
Utils: 1,086 +2.00 +0.2%
Nasdaq: 22,261 -72.63 -0.3%
S&P 500: 6,600 -6.41 -0.1%
|
YTD
+8.2%
-2.5%
+10.5%
+15.3%
+12.2%
| |
|
46,700 or 44,700 by 10/01/202516,700 or 15,200 by 10/01/20251,150 or 1,050 by 10/01/202522,700 or 21,400 by 10/01/20256,750 or 6,400 by 10/01/2025 | ||
Initial release: 9/8/2025.
The golden cross occurs when the 50-day simple moving average (SMA) crosses above the 200-day SMA in a major index. The golden cross is a buy signal, part of a pair that includes the death cross (a sell signal). The golden cross signal means the market is going to rise. How well does the golden cross indicator work?
This article answers that question and explores the golden cross indicator.
Analysis of the golden cross buy signal suggests you'll be buying into a security well after it hit its low.
The golden cross is the buy signal as a stand-alone indicator or as part of the trading pair with the death cross (sell signal). Let's take a look at an example, shown in the figure of the Dow industrials.
The wavy blue line, which looks black, is the 50 day simple moving average (SMA). The red line is the 200 day SMA. The golden cross happens at A, when the 50-day rises above the 200-day moving average.
The highest close is at D, a day before the index makes the highest high shown on the chart. At B, we see a death cross sell signal, where the 50-day slides below the 200-day moving average.
Point C is the lowest close within 6 months (130 trading days) before the golden cross.
Notice that the optimum buy point is C, almost a month before the golden cross buy signal. Also notice that the sell signal at B is well after the index peaks at D. Indeed, it looks as if the Dow is recovering from the recent low in mid April.
I mention the four points, A, B, C, D, because I use those points to analyze the indicator signals.
I use several terms in this article, mostly as column headers in the tables.
Hold Time. This is the hold time from buying at the golden cross until price makes the highest close between the golden and death cross signals. In the above chart, it's the hold time from A to D (not A to B).
Median. It's the middle value in a sorted list of numbers. For example, the median of 3, 1, 5, 4, 2 is 3. Sort the list (1, 2, 3, 4, 5) and pick the middle value, which is 3. Half the values are higher than 3 and half will be below.
Prior Low to Cross. This is the measure from point C in the chart (the lowest close within 130 days of (and before) the golden cross signal) to A (the golden cross signal).
Does a golden cross buy signal mean a significant rise will occur?
What does significant rise mean? If a rise of 20% off a low in the indices marks the change from bear to bull market, then let's use 20% as what I call a significant rise. I counted how many significant rises after a golden cross buy signal in the various markets, shown in Table 1.
| Market | Ten Percent Rise | Twenty Percent Rise |
| Dow industrials | 48% | 35% |
| Nasdaq composite | 75% | 56% |
| S&P 500 index | 78% | 54% |
| 475 Stocks | 62% | 47% |
| 94 ETFs | 56% | 40% |
| 43 Mutual funds | 69% | 53% |
The table shows a count (as a percentage of all trades for that market) of how many trades saw price climb at least 10% or 20% from the golden cross signal to the highest close before a death cross happened. It is not the size of the gain.
Using the above chart, that's a count of the number of trades that saw price rise from A to D. If you were to trade the signal perfectly and often, 35% to 56% of your trades would make at least 20%. I like to see my trades make at least 10%, so I show that column as well. There, we see that between 48% to 78% of trades make at least 10% (measured close to close).
For your viewing pleasure, I highlighted the highest and lowest values in each column.
The Nasdaq and S&P entries at 10% did well in both columns. The Dow industrials was the big under-performer in both columns (48% and 35%, respectively).
Table 2 is perhaps the most important table of this article. It shows the time between the prior low (the lowest close up to 130 days before the golden cross buy signal) and the rise is price between those two points. In the chart, it's the move from C to A.
| Market | Prior Low to Cross (Months) | Hold Time (Months) | Prior Low to Cross Rise | Hold Time Rise |
| Dow industrials | 3.0 | 6.5 | 13% | 10% |
| Nasdaq composite | 3.3 | 9.3 | 17% | 25% |
| S&P 500 index | 3.3 | 10.7 | 12% | 21% |
| 475 Stocks | 3.2 | 3.4 | 26% | 17% |
| 94 ETFs | 3.3 | 5.0 | 18% | 13% |
| 43 Mutual funds | 3.2 | 9.4 | 16% | 22% |
The "Prior low to cross" column is consistent across all market types. The delay (lag) from the lowest close to the buy signal is about 3 months. During that time, the market climbed between 12% and 26% (median). In other words, while you waited for a golden cross buy signal, the market was already climbing.
After the golden cross buy signal, the market climbed for a median of 3.4 months (for 475 stocks) to almost a year (10.7 months) for the S&P. In the chart, this is the hold time between the buy signal at A and the peak at D (the highest close between the golden and death crosses). Along the way, the market climbed a median of 10% for the Dow to 25% for the Nasdaq.
Notice that in half the cases (Dow, stocks, and ETFs) the biggest move comes before the golden cross buy signal.
| Market | Hold Time Rise | Rise Since Year 2000 |
| Dow industrials | 10% | 4% |
| Nasdaq composite | 25% | 23% |
| S&P 500 index | 21% | 23% |
| 475 Stocks | 17% | 16% |
| 94 ETFs | 13% | 13% |
| 43 Mutual funds | 22% | 21% |
Table 3 shows the recent price rise for data since year 2000 versus all data.
The Hold Time Rise column is the amount you would gain if you held your securities from the buy signal (golden cross) to the day price made the highest close. On the chart, that's A to D. Because the data used in some cases is old, I added the year 2000 column. Has recent market behavior changed the results?
For example, the Dow gained a median of 10% with data going back to 1932. More recent data shows the median rise is just 4%. For the other markets, the median rise hasn't varied much over time (which is good).
Let me emphasize that the rise I'm discussing represents a perfect trade, buying at the cost of the golden cross price and selling when price made the highest close. In actual trading (depending on when you sell), you could do better but likely much worse, especially if you sell at a death cross sell signal.
Let's say you want to trade using the pair, golden cross and death cross. How often would the sell signal (death cross) be below the buy signal (golden cross)?
I logged the closing price at the golden cross and again when the death cross signaled (which is the 50-day SMA moved below the 200-day SMA) and compared the two prices. Table 4 lists the results of what I found.
| Market | Failures |
| Dow industrials | 44% |
| Nasdaq composite | 25% |
| S&P 500 index | 24% |
| 475 Stocks | 56% |
| 94 ETFs | 53% |
| 43 Mutual funds | 37% |
For example, if you bought a stock using the golden cross buy signal and sold at a death cross sell signal, you'd lose money at least 56% of the time, on average, if you traded it a lot.
I'm just comparing the prices of the two signal crosses, not the entry or exit price for a hypothetical trade (no commissions or fees, nor how much you'd make or lose). Regardless, knowing that more than half the time you'd likely be setting up for a loss is valuable information.
| Market | Hold Time (Months) | Hold Time Since 2000 (Months) |
| Dow industrials | 6.5 | 1.6 |
| Nasdaq composite | 9.3 | 10.1 |
| S&P 500 index | 10.7 | 12.9 |
| 475 Stocks | 3.4 | 3.4 |
| 94 ETFs | 5.0 | 5.0 |
| 43 Mutual funds | 9.4 | 9.3 |
Table 5 shows the hold time (assuming you bought at the golden cross and held until the highest close), in months.
For example, the first Nasdaq signal I found was in January 1972. The hold time from the buy signal to the day price reached the highest close was a median of 9.3 months. Since year 2000, the median hold time was about the same, 10.1 months. The bottom half of the table shows similar hold times.
As traders, we'd like to make lots of money fast. Table 5 suggests investing in individual stocks (hold time 3.4 months) versus the S&P 500 index (hold time 12.9 months).
-- Thomas Bulkowski
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