Complex technical pattern in the S&P 500 may signal imminent recovery — Reuters

The S&P 500 Index’s 50-day moving average has crossed below its 200-day average, forming a "death cross", a technical indicator that historically precedes market downturns, though not always with certainty. Reuters analysts do not anticipate a significant negative impact.

Historically, the worst market declines often happen before a “death cross” appears. In more than half of the 24 cases since 1975, the S&P 500 had already reached its intraday low. There was a 46% chance of further declines (averaging 19%), but in other cases, the index rebounded quickly.

In past instances in 1981, 2000, and 2007, the formation of a “death cross” was followed by significant market sell-offs. However, recent data shows that markets often recover afterward. Bank of America notes that 30 days after a “death cross”, the S&P 500 rose 60% of the time. Some analysts now see potential for a rebound, Reuters reports.