Tuesday, August 11, 2015

INDU Dow Industrials Daily Chart Prints Death Cross Pattern

The Death Cross occurs on the Dow this morning with the 50-day MA crossing under the 200-day MA forecasting further weakness for the weeks and months ahead. Moving averages are simply the average price over a specified number of days so the 50-day MA is the average price over the last 50 days and the 200 is the average price over the last 200 days. Moving averages are smoothing mechanisms that take out the daily noise and erratic up and down action with price.

Seasoned technicians do not pay much attention to death crosses or golden crosses (when the 50-day MA crosses up through the 200-day MA). Rookie technicians and fundamental traders that tout technicals and become technicians during difficult trading times are the cheer leaders of such patterns. Interestingly, a stock or index will typically rally in price after a death cross occurs since price will already be in a steady downward path and ready for at least a dead-cat bounce. The death cross patterns do forecast weakness ahead for stock prices in the weeks and months ahead as long as the 50 stays under the 200. In the shorter term, however, after the death cross occurs, it is very common to see price briefly recover.

The 50-day MA is at 17808 and the 200-day MA is at 17814This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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