‘Death cross’ patterns spread to all corners of the stock market

Wednesday, September 2, 2015
By Paul Martin

By Tomi Kilgore
MarketWatch.com
Sept. 1, 2015

“Death cross” patterns continue to spread through the stock market like an epidemic, even infecting market segments believed to be more insulated from overseas turmoil.

The Russell 2000 index RUT, +0.10% of small-capitalization stocks became the latest victim among the major market indexes. The index’s 50-day moving average fell to 1,222.95 in midday trade Tuesday, crossing below the 200-day moving average (MA), which slipped to 1,224.11, according to FactSet.

Many chart watchers believe a death cross, when the 50-day MA crosses below the 200-day MA, indicates that a shorter-term decline has developed into a longer-term downtrend.

The Russell 2000’s last death cross appeared on Sept. 22, 2014. The index fell another 7.1% in the three weeks after that before bottoming at a one-year low.

That follows the death cross that appeared in the S&P MidCap 400 Index MID, +0.01% on Monday.

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