The golden cross, explained
A golden cross is the day a stock’s 50-day average rises above its 200-day average. It is a well-known bullish sign. The figures below show what actually followed in Indian stocks.
What it measures
The 50-day average follows the last two to three months of prices; the 200-day average, about ten months. When the shorter one rises above the longer one, recent prices have moved above the longer trend.
How it is calculated
Each day, average the last 50 closes and the last 200 closes. The golden cross is the first day the 50-day figure is higher, after being lower.
What happened next, in Indian stocks
These figures come from Sensifty’s monthly research and load here.
Why it often arrives late
Both lines are averages of past prices, so the cross happens only after a rise is well under way. By then, part of the move has usually happened. It confirms a change rather than anticipating one.
What it does not tell you
The cross is arithmetic on past prices. It does not tell you how long a rise will last, or whether the price is high or low for the business.
Related
Sensifty measures each of your stocks against its own history, and tells you once when a stretch cools off. Add to Chrome
Figures describe the past, among the 500 most traded NSE stocks at each date. They are not a forecast or a recommendation.