Recently I posted stats and charts on the much hyped “death cross” that is appearing on many DAILY charts, particularly on the major indices. The article has gained a wide audience as the most read post here in the last month. What I have found most interesting in this exercise of “if is sounds like a duck and looks like a duck, then it must be a duck” is how the market has a tendency to make fools of us all. Indeed, the market has a way of making the obvious so alluring that it can hypnotize all but the most astute. While all the talk about the so-called DAILY bearish death cross and head and shoulders has made the rounds on the tele and the inte, another interesting chart pattern has been playing itself out…and it is the arch nemesis of the former discussions: the golden cross. The golden cross, as you might expect, is the name given to the 50 day moving average crossing ABOVE the 200 day moving average and, therefore, is considered bullish. Last week, in one of my twice weekly crosshairs webinars for crosshairs traders only I discussed two scenarios playing out over the next week or so, one being the continued move down in the market because of the bearish death cross on the DAILY charts; the other being the bullish reversal setting up because of the golden cross on the WEEKLY NASDAQ futures chart (the pink line is the 50 SMA and the brown the 200 SMA). Take a look:
The NASDAQ FUTURES "Golden Cross"
Let’s keep a few things in mind here:
1) the market will oftentimes do what is least expected when most are not expecting it (that is why it is least expected)
2) there is ALWAYS two sides to every trade (ALWAYS)
3) the market has a tendency to direct our attention away from the truth by directing us to the obvious (obvious according to the crowd that is)
4) the best moves are usually the fast moves from false moves (gotcha!)
How this all plays out over the next few weeks is anyone’s guess but suffice it to say here that either the bulls will win as the strength of the bullish WEEKLY chart plays out and pulls the bearish DAILY charts up with it or the bears will win out as the bearish DAILY charts from most of the other indices pull the bullish WEEKLY chart down with them. One thing is for certain though, if you have already stubbornly picked a side without consideration of the enemy’s possible position then you will be slaughtered (as in pigs).
