You may have heard that the S&P 500 just triggered a rare “golden cross” signal. And this bullish stock indicator tends to mark the start of big new bull markets.
Golden crosses are triggered when a short-term moving average (MA) crosses above a long-term moving average. Typically, for this analysis, investors use the 50-day and 200-day moving averages. Therefore, the typical golden cross signal is triggered when the 50-day crosses above the 200-day MA.
Usually, it’s bullish.
The operative word there is “usually.”
Golden crosses are usually bullish. They aren’t always bullish.
Since 1950, the S&P 500 has experienced 36 different golden crosses. About 80% of the time, stocks are higher a year later, with an average return of about 10%.
Those are good odds. But they’re not 100%.
When we look at golden cross signals that happened more than 10% off all time highs, the odds look better. That has happened 16 times since 1950. In 15 of those 16 instances (94% of the time), stocks were higher a year later, with an average return of 16%.
Those are great odds. But… 94% is not 100%.
I’m looking for an indicator with a 100% hit rate. I don’t want any uncertainty. The 2022 bear market was too violent and too bloody for me to accept any room for error. I want certainty, certainty, certainty, and a little bit more certainty – with a side of certainty, if they’ll let me have it.
And that’s why I created the “Super Golden Cross” signal.
An Infallible Stock Indicator
The Super Golden Cross is my modified version of the standard golden cross signal, and it’s infallible. It isn’t 80% or 90% accurate. Going back to 1950, it has a 100% accuracy of predicting bear market endings and bull market beginnings.
It is triggered only when a convincing golden cross happens after a long bear market. Specifically, the Super Golden Cross is triggered only when the 50-day crosses above the 200-day MA and stays above it for at least three days, after spending at least nine months below it.
Between 1950 and 2022, this Super Golden Cross signal was triggered only eight times.
All eight times, it marked the end of a bear market and the beginning of a new bull market.
Every single time. No false signals. 100% accuracy. And average peak returns a year later were huge, on the order of nearly 25%!
The Final Word
This Super Golden Cross signal was just triggered this week, for the ninth time in history and the first time since 2009, when stocks proceeded to soar as much as 32% over the following year.
What’s that thing they say about history? Oh, yes… it tends to repeat.
History is repeating itself right now before our very eyes. Investors who are paying attention are putting themselves in a position to make huge profits.
And investors buying the right stocks right now are giving themselves the opportunity to make a small fortune.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.