Glossary
Death Cross
A chart signal where the 50-day moving average crosses below the 200-day moving average, read by some as a bearish shift.
On this page
A death cross happens when a security's 50-day simple moving average falls below its 200-day simple moving average. Because the 50-day line reacts faster, the cross means recent prices have dropped far enough, for long enough, to pull the short-term average under the long-term one. Many traders read it as confirmation that an intermediate-term Downtrend is under way. Its mirror image is the Golden cross.
How it forms
How useful is it?
Moving averages summarize the past, so the death cross always arrives after a decline has started. Sometimes that is still early: before the worst of the 2008 selloff, the S&P 500's death cross came months ahead of the March 2009 low. Often it comes near the end of a Correction, and the market recovers soon after, producing a whipsaw. In choppy, sideways markets the 50-day and 200-day can cross back and forth several times.
Because the signal is famous and published widely, its release often generates headlines but little new information. Traders who use it tend to combine it with other evidence such as Market breadth, volume or a break of key Support, and to test it on the specific market they trade with Backtesting.