Win -- Loss -- or -- Push

[rayrohn]

if we get a monthly death cross I wonder what Burnanke has in his bag of tricks to counter that ????

Pretzel :::: http://www.pretzelcharts.com/2012/09/spx-update-key-levels-for-short-term.html

>>>> Snip

Finally, a quick update to the SPX monthly chart and the position of the potential cross of the 50-month and 200-month moving averages. I covered the historical significance of this in detail in this article. The two averages have edged ever so slightly closer to crossing, and are now only 4 points apart.

The S&P 500 is Close to a Once-in-a-Lifetime Signal

http://www.pretzelcharts.com/2012/08/spx-update-market-close-to-giving-once.html

>>>> Snip

The SPX monthly chart shows a rare event that I've been keeping my eye on for a while: the pending potential cross of the 50 month and 200 month moving averages. It's fair to call this signal "once in a lifetime," since these two moving averages haven't crossed on SPX in over 66 years (they last crossed upwards, in April, 1946). When they cross downwards, this is commonly called a "death cross" and considered a bearish signal -- but before bears get too excited, it calls for some discussion.

While this signal hasn't actually happened in SPX for 66 years, SPX did come very close in 1978. This was at the tail end of the long secular bear market of 1966-1982. I say "tail end," but this is of course relative, and it was still 4 more years until the bear market actually ended. This monthly death cross happened a couple years later in the Dow Jones Industrial Average (INDU), in August of 1980. The INDU then crossed back up (called a "golden cross") in April 1982. However, in both those death cross instances, the bear market wasn't over -- and while we can look back and say it was near the "end" of a secular bear market, two to four years is still a pretty long time by the standards of most investors.

The Dow also experienced a monthly death cross during the Great Depression, in January of 1934; and the moving averages didn't cross back up until February 1946. There's no argument that this was a useful long-term signal at that time.

And then there's Japan. The Nikkei (NIKK) experienced a monthly death cross in early 1998, when the index was trading near 17,000. This cross is still active -- and the Nikkei is currently trading almost 50% below the signal level.

So while this signal is so incredibly rare that we have limited historical evidence to draw from, the past history suggests that it's a bearish signal for the long term. But, as the famous last words go, maybe "this time will be different."