Golden and Death Crosses Revisited

I have written about and back tested the so called Golden Cross (50 day moving average crossing above the 200 day moving average) and the so called Death Cross the 50 day moving average crossing below the 200 day moving average. Are these signals worth taking? For this back test I am using the simple moving average. Exponential may yield different results.

Longs are initiated the day after a golden cross and liquidated the day after a death cross. Short positions are established and reversed in like manner. i.e. always in the market either long or short.

First 77 years of Dow Jones Industrial Average:


I have highlighted the areas, I believe are of most interest to individual investors. If we look at long trades only the performance is sub par, short trades though, a disaster losing virtually all your money.

Let’s now look at SPY, the ETF for the S&P 500. Not 77 years this time but 26, which should be a good test.


I would call the results similar but you can delve into them yourself. Next week I will get into the excursions from each signal.