Our Chart Scanner Tool 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 or experienced “death” or “golden” crosses.
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. Although it is valuable to look at Golden and Death Cross formations, as we have pointed out in the past, it is not always a reliable pattern and does not always serve as a good buy or sell signal. Today, we wanted to highlight recent examples of each formation and show how they performed going forward
As an example of a Golden Cross, below we highlight Generac Holdings (GNRC) which saw a Golden Cross yesterday. GNRC makes home generators and has seen steady growth as concerns over the reliability of the power grid have increased in recent years. Over the last ten years, GNRC has shown consistently positive returns in the three month period following its four prior golden crosses. As you can see below, the stock’s average three-month return has been a gain of 10.13% (median: 11.38%).
On the negative side, below we highlight the price chart of the iShares MSCI Turkey ETF (TUR) from 2009 to 2019. Turkey has been a country in turmoil in recent years, and prior death crosses in TUR have played out as the formation suggests. In the three prior death crosses for the ETF, the stock has declined over the following three months for an average decline of 11.31% (median: -4.63%).Our Chart Scanner tool is indispensable for any investor who likes to follow charts. To receive access, start a two-week free trial to Bespoke Institutional for full access.