Testing the “Golden Cross” and “Death Cross” on SPY

Key Takeaways:

• Buy-and-hold investing beat both attempts to time the market (although that isn’t always the case).
• “Golden cross” – Bullish; occurs when the 50-day moving average crosses above the 200-day moving average.
• “Death cross” – Bearish; occurs when the 50-day moving average crosses below the 200-day moving average.

The investing community is surprisingly divided on the usefulness of technical analysis, so today I wanted to put a classic strategy to the test. Namely, using the “golden cross” and the “death cross” as buy and sell signals.

Both of these are moving average crossovers. The golden cross occurs when a stock or index’s 50-day moving average crosses up and over its 200-day moving average. The death cross is the inverse, where the 50-day line crosses below the 200-day.

Both events indicate that shorter-term price action (momentum) has overpowered the longer-term trend, with the expectation that the longer-term trend will follow suit. In other words, a golden cross signals bullish short-term price action that could translate into a rising longer-term average (and continued rising share prices).

By that same token, the death cross indicates that bearish short-term price action is overwhelming support levels and points to even lower prices ahead.

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If you’re a value investor, price movements are an opportunity to buy when the market is undervaluing your stocks or sell when the market is overvaluing them. In either case, the value of the underlying company is unchanged. Benjamin Graham used the analogy “Mr. Market” to explain that viewpoint.

On the other end of the spectrum are the high-paced day traders who can trade anything under the sun if they’ve got the right combination of technical indicators and studies. Most individual day traders do not beat the market.

As for Cabot, our analysts fall somewhere in the middle, but Mike Cintolo’s approach to technicals is a healthy one. Just one piece of the puzzle to be used in a more holistic approach. In Cabot Growth Investor, Mike will sometimes refer to the “SNaC” approach, which is to say the “Story, Numbers and Chart.” The chart doesn’t tell the whole story, but it tells part of it.

To find out who’s right, let’s dive into some numbers on the S&P 500 ETF (SPY) using moving average crossovers as buy and sell signals.

Testing the “Golden Cross” and “Death Cross” as Buy and Sell Signals

For our exercise, we’ll compare performance over the last five years. A golden cross will trigger a buy on the next trading day. A death cross will trigger a sell on the next trading day.

As you can see on the chart above, there are four instances where the 50-day moving average crossed over the 200-day moving average in the last five years: two bearish and two bullish. (We’re using simple moving averages; you can read more about the distinction between simple and exponential moving averages at this link.)

We’ll compare that performance to simply buying the SPY five years ago.

The Performance of Buy-and-Hold

If you bought the SPY on September 13, 2021, and held it until today, an initial investment of $10,000 would be worth $18,313, a return of 83.1%, or 12.9% annually (assuming you reinvest dividends).

You’ve nearly doubled your money in five years, which is great and exceeds the historical long-term average returns of large-cap stocks.

The Performance of the Golden and Death Crosses

Right off the bat, we’re faced with a conundrum: Should we invest in the SPY? If we’re using golden crosses as our entry triggers, what do we do when our first trigger is a death cross (sell) in March of 2022, six months after our window begins?

That’s a very real concern, so we’ll track two performance numbers: One in which you buy on the first trading day of our period because the last event was a buy signal (50-day line over the 200-day line means the last signal we would have gotten is a golden cross), and a second where we do not buy until a subsequent crossover tells us to.

Here are the results of both of those scenarios (both assume dividend reinvestment as well):

As you can see, both approaches would have generated roughly the same total returns (66.2% total when buying at the beginning of the period vs. 67.2% when waiting for a golden cross), and both would have underperformed simply buying and holding.

What can we, as investors, take away from this? For most investors, the old adage that “time in the market beats timing the market” is a good rule of thumb.

We’ve run this analysis a handful of times before, and in most cases, buying and holding is the best-performing strategy. That said, we did encounter one instance in which scenario 2 would have actually been the best-performing strategy: in the five-year window from January of 2020 through January of 2025, largely due to the Covid selloff and the buy signal in July of that year, while the same analysis performed in March of this year (March 2021 – March 2026) found scenario 2 to be the biggest loser.

In other words, market timing in these exercises hasn’t translated to reliable outperformance, even though it has outperformed at times.

Interestingly, in the handful of times we’ve run this analysis, buying based on the last signal and then following the golden/death cross strategy (scenario 1) has never been the best-performing approach.

That presents a solid case for not making arbitrary buy or sell decisions and then pivoting to a structured approach; if you’re going to buy and hold, buy and hold; and if you’re going to use market timing, use market timing.

For most investors, the most important takeaway is that maximizing your time in the market remains the easiest way to maximize your returns, even if market timing will sometimes outperform.

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*This post has been updated from a version previously published in March 2026.