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Hans Christian Andersen wrote cautionary fairy tales, some of which, like “Little Red Riding Hood”, are used to frighten small children.
Some commentators latch onto market fairy tales and use them to frighten ill-informed investors. The Death Cross is part of this evil fairy tale vocabulary.
The Death Cross sounds suitably terrifying and ominous, but its signals are not reliable and the market is riddled with false Death Cross signals where the index has rebounded and continued the uptrend. The Hang Seng showed false Death Cross signals in 2014, 2013, 2012 and 2010. In the Dow, the signals are false in around 60 percent of recent occurrences.