The Test Bench › Moving averages › Golden cross
The golden cross and the death cross, how they are built from the 50-day and 200-day averages, and why they arrive late, with what our tests found.
A golden cross is the day the 50-day moving average rises above the 200-day; a death cross is the day it falls back below. Many traders read the first as bullish and the second as bearish, but both arrive after the price has already moved. We tested what followed them on S&P 500 stocks.
The cross is set at the close; a trading rule then acts in the next session, at the open in our backtest.
The 50-day average only rises above the 200-day after the price has been rising for long enough to lift it, so the cross often comes after a recovery has begun; the delay depends on the size and shape of the move. The death cross has the same delay after a top. The delay comes with fewer signals: a shorter pair, such as the 9/21 EMA, turns sooner and gives many more signals that reverse soon after.
These published tests ask different questions from ours: some measure what followed a signal, others a rule that moves between the market and cash. On the S&P 500 index, Arthur Hill at StockCharts (June 2016) found that holding only while the 50-day was above the 200-day beat buying and holding from 1991 to 2015, mostly by stepping aside in bear markets. For many stocks and indices, Bespoke (April 2016) reported that the back-tested returns after a golden cross were unremarkable. SentimenTrader (April 2016) reported that, on the index, golden crosses with a still-falling 200-day average did better than those with a rising one, a claim our study checks on single stocks.
How to read these results. An event study compares the days after a signal with ordinary days of the same stocks; a backtest runs one complete rule with costs and reports a median total return per stock over the whole period; the two answer different questions. “Clear” is our own rule: the 95% interval excluded zero under every test setting we ran, which is not proof that a gap will last. All tests use today’s S&P 500 members projected back, which can flatter strategies that hold through deep falls, such as buying and holding (see survivorship bias in backtesting), and price returns without dividends.
Golden and death crosses on 483 S&P 500 stocks, 2006 to September 2026: no clear difference from ordinary days over the next 100 trading days in any of the four signal tests.
The golden cross, the 200-day average and the 9/21 EMA as trading rules on 483 S&P 500 stocks, 2006 to September 2026, with next-open fills and costs, against buying and holding.
The day a stock’s or index’s 50-day simple moving average rises above its 200-day simple moving average. Many traders read it as a sign of a long-term uptrend.
The day the 50-day moving average falls below the 200-day moving average, read by many traders as a sign of a long-term downtrend. It is the golden cross in reverse.
In our test on 483 S&P 500 stocks, the 100 trading days after a golden cross in a stock above its 200-day average were not clearly different from ordinary days. In our separate SPY backtest, 2006 to September 2026, the golden cross rule returned 7.8% a year with a deepest fall of −34%, against 9.1% a year and −56% for buying and holding: a smaller fall and a lower return.
It is read as bullish, and it comes after the price has already risen for some time, because both averages lag the price. Bespoke (2016) reported that, for many stocks and indices, the back-tested returns after it were unremarkable; on the S&P 500 index, a rule built on it gained mainly by stepping aside in bear markets (StockCharts, 1991 to 2015).
In our study, the 483 current S&P 500 members averaged about 13 golden crosses each, every cross counted, from 2006 to September 2026, roughly one every 1.5 years; a stock that moves sideways crosses more often. On the S&P 500 index itself, Bespoke counted 16 golden crosses in its history before April 2016, counting only those with both averages rising.
The 50-day and the 200-day simple moving averages of the daily close. Some traders use exponential averages or other pairs, such as 20 and 50, and call those crosses golden too.
In our test, stocks below their 200-day average rose a median 5.3% in the 100 trading days after a death cross; the test did not show a clear difference from ordinary days in the same trend.
A simple rule buys at a golden cross and sells at the next death cross. Our backtest runs that rule with costs against buying and holding.
Want to test the golden cross yourself?
Build the crossover from the default 50-day and 200-day averages, measure what followed it on your stocks, or backtest it with a cost on each trade.
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