Friday, June 1, 2012

Mayan Cross History

While the last post was tongue in cheek, I thought it might be interesting to look back at the history of when a 50 month moving average has crossed the 200 month moving average just to see how rare an occurrence this actually is.  As you can probably guess, this has really only happened in two market periods: the depression and the 70s.  During the depression, the cross occurred at the beginning of the period and didn't reverse itself until 1945, after World War II had ended.

In the 70s, the convergence followed a pattern more similar to the one that has occurred in the recent period.  Following a protracted sideways move in the Dow, the averages finally converged in 1978, but didn't really diverge again until 1982.

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