Our recently launched Chart Scanner has become an incredibly popular and useful tool for clients as it gives a user the ability to quickly scan through hundreds of charts in order to find the most attractive (or unattractive) patterns. Included with the tool are a number of pre-defined screens that allow users to see stocks that hit 52-week highs or lows in the previous session, experienced “death” or “golden” crosses, as well as charts which we view as having bullish or bearish patterns. Each of these screens can be found using the drop-down box at the top of the page (as illustrated in the image below). To unlock our Chart Scanner tool, simply sign up for a two-week free trial to Bespoke Premium. You won’t be disappointed!
One stock that showed up on our Golden Cross screen today was Exxon Mobil (XOM). After a rough first quarter for the stock, shares of XOM came roaring back in the second quarter and just yesterday completed the formation. For anyone who is unfamiliar with the term, a Golden Cross occurs when a stock’s upwardly sloping 50-day moving average (DMA) crosses above its 200-DMA, which also has to be rising. Conversely, a Death Cross occurs when a downwardly sloping 50-DMA crosses below the 200-DMA, which also has to be moving lower. Technicians consider Golden Cross formations to be a positive signal, while a Death Cross is considered to be negative. In practice, however, that is not always the case.
The chart below shows the performance of XOM over the last ten years, and we have included arrows to show occurrences of each Golden Cross for the stock. Prior to yesterday’s formation, XOM had seen five other Golden Crosses over the last ten years with the most recent occurring back in December 2013.
We mentioned above that Golden Crosses haven’t always been bullish for future stock returns in practice, but in the case of XOM, prior occurrences have, for the most part, been positive for the stock. Even in this case, though, it hasn’t been overwhelmingly bullish. The table below lists the one week, one month, and three month returns for the stock following each prior Golden Cross. In the week that followed the five prior occurrences, XOM averaged a gain of 0.63% (median: 0.23%) with positive returns just three out of five times. One month later the stock saw an average gain of 2.10% (median: 2.10%) with gains four out of five times, while the average three-month return was a gain of 3.18% (median: 1.77%) with gains three out of five times.