5 Major Stocks Just Entered Death Crosses
We don’t like to state the obvious or beat a dead horse. But the markets have been a complete disaster for almost three months, especially in December thus far. The Nasdaq Composite and small-cap Russell 2000 both fell into bear markets this past week (defined as 20% or more below the latest peak). And the S&P 500 and DJIA (Dow) are both deep in correction (at least 10% below the latest peak). Shockingly, the Dow and S&P 500 are on track towards their worst December performances since 1931, which was during the Great Depression.
Majority of S&P 500 Already Death Crossed
Needless to say, bearish signals are everywhere. We might as well add another one here: over 300 of the S&P 500 companies have their 50-day moving averages below their 200-day moving averages, which means they’ve had death crosses at some time in the past. Again, that’s over three-fifths of S&P 500 stocks are now already entrenched in death crosses.
What is a Death Cross?
A ‘death cross’ is a chart pattern usually defined by technical analysis as the crossing of a shorter-term moving average below a longer-term moving average. Typically, the most common moving averages used in this pattern are the 50-day and 200-day moving averages. The death cross doesn’t happen very often on most major stocks or indexes. Because of this, it’s one of the most widely watched technical formations that exists, and it’s also among the patterns considered most bearish, or negative, by technical analysts. The expectation is that a stock will often extend its fall further after a death cross.
A Graveyard of Major Death Crosses
Most recently, some of the largest, most heavily traded stocks in the S&P 500 have just entered into the pattern in the past few days and weeks. These include:
- Apple Inc. (AAPL)
- Amazon.com, Inc. (AMZN)
- Exxon Mobil Corporation (XOM)
- The Boeing Company (BA)
- Nike, Inc. (NKE)
Apple Starting to Rot
The chart above shows the Apple (AAPL) death cross, which just occurred in the past couple of days. When a heavyweight with such a large market cap (though much smaller than it was just a few month ago) sends out such bearish signals, the market as a whole takes serious note. AAPL has been plunging since early October, and is now down 11.90% year to date (as of Friday’s market close).
Amazon Selling Off
Here’s Amazon.com, Inc. (AMZN):
AMZN entered its own death cross just over a week ago. Though the stock is still up 16% for the year (as of Friday), price just broke down below key support, which we recently talked about here: Make or Break Time for Amazon.com (AMZN) Stock. The combination of a death cross and a breakdown below support is an exceptionally bearish signal.
Exxon Mobil in a Sustained Slide
Here’s Exxon Mobil Corporation (XOM):
XOM hit its death cross about a week ago, and the stock is down nearly 19% year to date. The combination of falling equity markets and plunging crude oil prices has hit the company severely.
Boeing Lands Hard
The Boeing Company (BA) is next:
BA entered the death cross zone just this past week. It’s up around 3% for the year, but it’s been faltering badly since October.
Nike Not Doing It
Finally, we have Nike, Inc. (NKE):
Nike “just did it” very recently. It confirmed a death cross only a couple of days ago. The stock is up a very healthy 15% or so year to date, but the exceptional volatility and turbulence in the overall market has been bringing NKE down sharply from its highs.
Former Market Leaders, Now Market Losers
Again, the stocks featured above are only a small handful of the large number of stocks that have entered into death crosses due to extreme bearishness in the markets. There are many more. These are just some of the largest and most prominent names that have very recently flashed this important technical signal. This is of critical significance because these former market leaders are now showing pronounced weakness that’s further pressuring investor confidence. This could very well lead to even more weakness as we look towards the New Year. Tread cautiously.
IMPORTANT: The information above should not be construed as investment advice and should not be considered as a solicitation to buy or sell securities. Trading and investing in the financial markets involves substantial risk of loss, and may not be suitable for all investors.
Disclosure: At the time of this article’s publication, we have no position in any security or trade/investment mentioned, nor do we have any business relationship with any company whose stock may be mentioned.
Senior Technical Analyst at The Technicals
As a momentum stock trader, Luke focuses mostly on strong market moves. Luke has been trading the markets since the early 2000s, but still gets excited by big movers. Whether a surging large-cap tech company or meteoric penny stock, Luke tracks and trades winners. A technical analysis purist, Luke authors many of our Top Stocks & ETFs reports. Contact Luke