The final death cross happened today. The Dow led the way in August, followed by SPY and the Russell 2000. However, the final horse, the Nasdaq - had held off the death cross - until today. The 50 DMA crossed over the 200 DMA - putting the Nasdaq into a death cross chart formation, the last of the 4 major indexes to do so.
What does this mean to you? Other than the fact this happening gets a cool name 'the four horseman of the apocalypse' - does this mean your portfolio is about to take a hit?
Let's go to historical returns when the four horseman arrive in the market. History says the 1 month return will be lower. Of the 11 times we've seen this happen in modern times, the market fares poorly in the short term. However, sometimes this leads to 'capitulation' selling and the market tends to do well in the intermediate term - up almost half the time.
Bottom line is do not panic, but be ready for more volatility in your portfolio. You just might see a wave of red coming soon.
What does this mean to you? Other than the fact this happening gets a cool name 'the four horseman of the apocalypse' - does this mean your portfolio is about to take a hit?
Let's go to historical returns when the four horseman arrive in the market. History says the 1 month return will be lower. Of the 11 times we've seen this happen in modern times, the market fares poorly in the short term. However, sometimes this leads to 'capitulation' selling and the market tends to do well in the intermediate term - up almost half the time.
Bottom line is do not panic, but be ready for more volatility in your portfolio. You just might see a wave of red coming soon.