Can a Golden Cross reverse?
I'm a trader (w/out my PC I can't see mov avg line etc.) So, I was going to buy the SDS short the S&P. Until a guy in fox said the Dow held the 59 day which is bullish and two other brokers said the Dow just had a golden cross? HUH? It looks like we are about ready to drop off the right side of the third top on the Dow & S&P! How can we have a golden cross on the Dow without at least dropping to the last lows FIRST?
Nice to see some traders out there! Yes, a Golden Cross can reverse or maybe what you are asking is if will always follow through. The answer is absolutely no. As you are well aware technical analysis is more of an Art than a Science so, many, many times the patterns do not give you the results you were hoping for. I would agree with the line of thinking that the market is weak and the probability of lower prices is very likely especially since the S&P 500 Index has not been able to break above the previous resistance of 2131-2135. I would use the SPY as your proxy since SDS can flaw the real picture with it's reseting prices daily using daily compounding. I have also found that the 20 Day Exponential Moving Average, 50 Day Simple Moving Average and the 200 Day Simple Moving Average to work real well too. When prices go below or above the 20 Day EMA you can determine whether to go short or long for a quick trade. Also take a look at symbol HDGE. It is a true short and is not leveraged so the prices do not reset or compound daily. Happy trading! You can do this!