About this Video

• Video Title: S&P 500 notches first death cross in 3 years
• Channel: Yahoo Finance
• Speakers: Jared Blickery
• Duration: 00:03:23

Introduction

This Yahoo Finance video explains the "death cross" phenomenon in the S&P 500, defining the term using moving averages and presenting statistical data on its historical performance. The video aims to clarify the meaning and implications of a death cross for investors' returns.

Key Takeaways

• Definition of Moving Average: A simple average of a stock's price over a set period (e.g., 50 or 200 days), updating as new data becomes available.
• Definition of Death Cross: Occurs when a short-term moving average (like the 50-day) falls below a long-term one (like the 200-day), often interpreted as a bearish signal.
• Statistical Analysis of Death Crosses (1961-present): Based on 32 instances since 1961, the immediate impact is slightly negative, with positive returns more likely in the longer term (weeks, months, and years). However, the positivity rate (around 47%) isn't high enough to be considered bullish.
• Death Cross as a Trading Signal: The death cross itself isn't a definitive trading signal; confirmation or rejection is needed. The video uses examples of the S&P 500 and Tesla to illustrate different post-death cross behaviors, highlighting that market reactions vary.
• Market Behavior After a Death Cross: Post-death cross market behavior varies. Sometimes a quick decline is followed by a rapid recovery, while other times, a slower, more prolonged decline occurs.