By Elizabeth Stanton and Jeff Kearns
June 24 (Bloomberg) -- The Standard & Poor’s 500 Index is poised to extend its 32 percent rally from a 12-year low in March, according to a technical indicator called the “golden cross” that’s considered a bullish signal by analysts who make predictions based on patterns in price charts.
The 50-day moving average for the S&P 500 exceeded its average price for the prior 200 days yesterday for the first time since December 2007. A 50-day average moving higher than a 200-day average is termed a “golden cross” by technical analysts.
“It’s a good long-term signal,” said John Schlitz, the New York-based chief market technician at Instinet, a unit of Nomura Holdings Inc. that handles about 5 percent of U.S. equity trading. “It’ll be important if over the next month or two it can maintain it.”
The S&P 500 added 0.2 percent to 895.10 yesterday, rebounding from the 3.1 percent plunge a day earlier that was the steepest in two months. The index has rallied since March on speculation the economic contraction is slowing. Its 50-day average rose to 899.36 yesterday, while the 200-day average fell to 899.03, down from 1,184.58 at the end of last year.
“Some people also are viewing it as being not quite as potent as they would like, because there’s still a pretty good downward slope to the 200,” Schlitz said.
To contact the reporters on this story: Jeff Kearns in New York at jkearns3@bloomberg.net. Elizabeth Stanton in New York at estanton@bloomberg.net
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