Major shift observed in the S&P 500, hinting at significant developments to come.
The S&P 500, a key benchmark for the US stock market, has a history of advancing over time, making it a good idea to bet on top quality stocks and hold on for the long term. This trend is further supported by the technical analysis of the Golden Cross, a pattern that suggests the index may continue its upward trajectory.
The Golden Cross, a bullish signal in technical analysis, occurs when the 50-day moving average crosses above the 200-day moving average. According to data from Carson Investment Research since 1950, the S&P 500 has delivered a higher return 80% of the time in the year following a Golden Cross, and has a median return of 13%. However, it's important to note that the specific analyst or firm credited with this analysis is not explicitly identified in the provided search results.
While technical analysis and history can offer clues as to what's possible, they should not be relied upon exclusively. They do not include fundamentals or news that may offer investors a reason to buy or sell. For instance, the weakness of technical analysis lies in its ignorance of factors such as corporate earnings or economic and political news.
The S&P 500 increased by 24% in 2023 and 23% in 2024, suggesting a potential third straight year of double-digit gains. If history holds true, the S&P 500 could post double-digit returns this year. However, it's crucial to remember that historical trends and technical analysis do not always repeat themselves.
In light of the current economic and earnings situation, a closer look at the Golden Cross could help us decide whether to take a bullish or bearish view of the market in the months to come. It might be used as one element to add to others, such as economic indicators, corporate earnings reports, and geopolitical news, in making investment decisions.
In conclusion, while the Golden Cross and historical trends suggest a positive outlook for the S&P 500, it's essential to consider all factors before making investment decisions. A well-rounded approach that includes technical analysis, fundamentals, and current news is likely to yield the most accurate results.
