THE TECHNICAL SIDE

 
If you're of a technical bent when it comes to the market, you might find this article of interest.

marketwatch.com/story/technical-analysts-are-spotting-a-bullish-signal-in-the-sp-500-2015-12-18

Technicians pay lots of attention to things like price and volume. They also focus on trends and moving averages and less so on more abstract terms like value. You could say, at least in their view, they try to omit much of the noise like P/E ratios and earnings and sales otherwise known as fundamentals.

Their world in brief consists of charts and moving averages and so on. Over the years there's been many well known technicians, people like Marty Pring, John Murphy, Marty Swartz and a host of  others to. Numerous to list here. Some were well known for their writings, others their trading prowess.

Even with Friday’s selloff, the S&P 500 index is on the verge of passing into territory interpreted by market technicians as a bullish indicator.

As the article notes, there something called the "golden cross." It's an indicator based on  50-day and 200-day moving averages and when to reaches or crosses certain points. The important point to keep in mind here is it's an indicator. Indicators are not infallible, but certainly of interest.

The S&P 500 SPX, -1.78%  is less than a point away from a so-called “golden cross,” when the index’s 50-day moving average crosses above its 200-day moving average. In fact, golden crosses occurred with the Dow Jones Industrial Average DJIA, -2.10%  on Wednesday and the Nasdaq Composite IndexCOMP, -1.59%  on Dec. 8.

Currently, the S&P 500 is down about 20 points, after Thursday’s 31-point selloff. The S&P 500 saw a so-called “death cross,” when the 50-day moving average fell below the 200-DMA, on Aug. 28.

In data compiled by Dow Jones, a golden cross on the S&P 500 has only happened 22 times since 1970, and of those occurrences, the index traded higher 19 times, or 86% of the time, a year later. The last time a so-called golden cross occurred on the S&P 500 was Jan. 31, 2012, according to Dow Jones data.

While historical data is no indicator of future performance, data shows that of the last six times a golden cross occurred on the S&P 500, the index was up 12.4% on average a year later. Going back to 1970, that average drops down slightly to a 11.3% gain one year later.

Shorter term, the tendency of the S&P 500 trading higher falters a bit but is still encouraging.

Using the data going back to 1970, the S&P 500 traded higher 73% of the time three months after the cross with an average gain of 4.8%, and traded higher 59% of the time one month later for an average gain of 1.7%.