Skip to content
GetProfitable
Search
Dictionary

Death cross

When a shorter moving average, usually the 50 day, crosses below a longer one, usually the 200 day, treated in media coverage as a bearish milestone.

A fast and a slow moving average crossingA jagged price line with two smoother average lines through it; the fast average dips below the slow one on the left and cuts back above it in the middle, where a circle marks the crossing.pricefast averageslow averagefast crosses belowfast crosses abovethe slow averageAverages of recent closes; the fast one reacts sooner than the slow one.
Fast and slow moving averages crossing. A moving average is the average of the last few closing prices, redrawn each period. An average over fewer periods turns sooner than one over many, so the two lines cross whenever the recent pace of the market changes.

The mirror of golden-cross. It gets heavy press attention because the name is dramatic and the calculation is simple enough to explain in a headline.

As a signal it is extremely late by construction: both averages are backward-looking, so the cross typically occurs well after a decline is underway and often near a short-term low. Studies of index data generally find that forward returns after a death cross are not reliably worse than average, and sometimes better.

Its practical value is descriptive. It tells you the market has been weak for a while, which you could already see. Treating it as a sell signal on the day it prints has a poor historical record, and it is a good example of indicator-lag being mistaken for insight.

Related: golden-cross, moving-average-crossover, indicator-lag, simple-moving-average, trend-following

Educational only, not advice. Spotted an error? Post in Site Feedback.