S&P 500 Nears ‘Ultimate’ Death Cross!
For the S&P 500 index, an ultimate death cross is when the 50-month moving average moves below the 200-month average, according to a research note by Societe Generale (SocGen). The term refers to the shape that is created on the chart when a market’s long-term average breaks its short-term moving level. When this happens it is usually an indicator of an upcoming bear market or a tip to sell off. Strategist Albert Edwards said the last time the index was this close to the death cross was “towards the end of the 1965-1982 secular bear market.” He added that Japan was hit by the death cross in 1988, “and 14 years later we are still in the firm embrace of the bear.”
As we approach this potential devastating cross, the data regarding monthly analyst optimism has slid significantly over the last few years which would indicate that the U.S. is already amidst a recession. Since we are said to be in state of slow recovery how is it that all of this data shows impending recession and a looming bear market. Combine this information with the upcoming fiscal cliff issue and we could have cataclysmic issues within the market. The next few 6 months could hold some big hurdles for growth in US and potentially push the economy into a further tailspin. Now is the time to make sure assets are protected.
To read the entire editorial by Katy Barnato with CNBC click S&P 500 nears ultimate death.
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