Summary
The stock market has settled down over the past couple of days and volume has fallen sharply since we saw huge volume earlier this month. Fortunately, not all that trading was to the downside as there were a few accumulation days. During a correction phase and many times near ‘a low,’ volume hits very high levels. When the market starts a new uptrend, volume must increase, but will never reach the levels during the decline — especially when the downtrend had at least a tinge of panic. We have witnessed what is dreadfully called ‘a death cross’ for the S&P 500 (SPX), the Nasdaq, and the Nasdaq 100 (QQQ) — but just barely. The S&P 400 had such a cross on April 3 and the S&P 600 on March 18. A death cross is when the 50-day simple average crosses below the 200-day on an index, industry, sector, or individual stock. While there have been some massive SPX declines after a death cross (including 1930, 1937, 1940, 1962, 1969, 1973, 1981, 2000, 2002, 2007, and 2022), there also have been instances where the losses were less than 10% and other times when there was no loss at all. So we view a death cross as a warning, but with a good deal of ‘urban legend’ baked in. We also have seen some other potentially worrisome crossovers in the SPX, with t
