Golden Cross – Death Cross

I’ve not done much in the way of stock postings, largely since I’d said it was topped and not going anywhere much and, well, for a year it’s been topped and not going anywhere much. We took a nice dip and recovery. We’re now at horridly low volume and volatility near the prior top. It all sets up for a roll-over ‘soon’ in my opinion. (likely, IMHO, just after the election and when The Fed hikes rates in December).

SPY 10 year weekly with volume volatility and MACD 16 Oct 2016

SPY 10 year weekly with volume volatility and MACD 16 Oct 2016

While we wait for that set-up to play out (or, possibly, fail to actualize…) here’s an interesting site that gives you places to ‘go fish’ for stocks likely, in their method of analysis, to have a 50 day / 200 day moving average crossover. When the 50 day crosses to on top, that’s called the “Golden Cross”. When crossing to under that is the “Death Cross”. I’d do more with them, but the particular SMA (Simple Moving Average) choices on BigCharts don’t give you that option. (A dramatic failure on their part, IMHO).

At one time I had a screen scraper running to get stock ticker data and then a custom analysis program that would sift through it for 50 / 200 crosses (or any other limits you set), but it has been ‘living in a box’ for a couple of years now ( I was working on contract ‘on the road’ and carting around a big old white box PC was, er, problematic) so it would require more time to rehabilitate it and get it trained (i.e. current data downloaded for 200+ days) than I have available. Add in that it’s in C, expects a particular public web site to have not changed their screen… well, “needs work”…

But this site does that same screen and gives you candidates for a crossover.

Now realize each of these takes a lot more evaluation. Is it a penny stock? Is it a thin market in a foreign country known for manipulation? Which way is the likely cross going? etc. etc. Now I prefer to use this kind of crossover of averages on the broad market. It, then, indicates broad economic trends and consensus among the mass of money. Here it is applied to individual stock tickers, so movement could just be due to a bit of news per the CEO and a Showgirl… So check your back stories and the corporate financial sheets too. This just gives a starting point in stock picking, not an answer.

http://www.trade-ideas.com/StockInfo/50_day_sma_crosses_200_day_sma.html?more=1

Description
This list shows which stocks are most likely to have their 50 day SMA cross above or below their 200 day SMA in the next trading session. This is an important trading signal for institutional traders. When the 50 day SMA crossed below the 200 day SMA, it is called a “death cross.” When the 50 crossed above the 200, it is called a “golden cross.”

We do not track the actual cross-over event. We focus on a smaller time scale. Many stock screeners focus on daily candlesticks; they would be the best place to find out what crossovers happened the previous day.

To predict which stocks are most likely to have a moving average crossover in the near future, we compare the two moving averages, then use the stock’s recent volatility to see how likely it is for the moving averages to cross in a fixed amount of time.

The formula for this list is absolute_value(50 day SMA of the closing prices – 200 day SMA of the closing prices) / volatility. The smallest value is shown at the top of the list.

It is an interesting way of guessing what is likely to move next. The ‘risk’ in it is that a stock in a long flat trend with jiggles will have a lot of 50 / 200 crosses… and not mean anything.

So what’s at the top of their list right now?

Note: Tickers with 4 letters are typically smaller stocks, 3 or 2 letters are typically old and known, a single letter is typically reserved for the largest and oldest companies. Tickers ending in a Q are usually in bankruptcy. So a ‘quick scan’ would eliminate any ending in Q and focus on names you know or those with a 3 or less ticker. If you don’t find anything interesting, then come back and look at others. I’ve bolded a few of the names I recognize and I’ve used Italics for the Q ones. Just to emphasize that this isn’t a suggested ‘pick list’, but a selection of dirt to dig through looking for precious stones… or dross. (I note with humor that “BB Liquidating” looks to be in liquidation ;-)

Stocks
SPRT - SUPPORT.COM
PUDA - PUDA COAL NEW
CBGI - CANNABUSINESS GROUP
RNET - RIGNET
MDCN - MEDICAN ENTERPRISES INC COMMON
IPG - INTERPUBLIC GROUP of COMPANIES
NBRI - NORTH BAY RESOURCES INC COMMON
GRAS - GREENFIELD FARMS FOOD
ELAY - ELAYAWAY INC
BLIAQ - BB LIQUIDATING INC
TTS - TILE SHOP HOLDINGS
REVI - RESOURCE VENTURES INC COMMON
BCLI - BRAINSTORM CELL THERAPEUTICS I
DTK - DEUTSCHE BANK CONTINGENT
PHRX - PHARMAGEN INC
GSFVF - GASFRAC ENERGY SERVICES
BMIN - BRITANNIA MINING INC
MMLP - MARTIN MIDSTREAM PARTNER
AAWC - ALEXANDRIA ADVANTAGE WTS
FLST - FUELSTREAM
POLR - POLAR PETROLEUM CORP
GOFF - GOFF CORP
CTLT - CATALENT INC
PVI - POWERSHARES VRDO TAX-FREE WEEK
PDS - PRECISION DRILLING
MDDD - MAKISM 3D CORP
SVVC - FIRSTHAND TECH
PMCM - PRIMCO MGMT INC
FFFC - FASTFUNDS FINANCIAL CORP
CCC - CALGON CARBON
EIV - EV MUNI-BOND II COMMON
PFX - PHOENIX COMPANIES 7.45 % QUART
LATF - LATTENO FOOD CORP
CNTO - CENTOR ENERGY
FROT - FALCONRIDGE OIL TEC
NEPT - NEPTUNE TECHNOLOGIES
WNR - WESTERN REFINING
ATTD - ATTITUDE DRINKS INC
PWCL - POWER CLOUDS INC COMMON
FONU - FONU 2 INC COMMON
BX - BLACKSTONE GROUP
VCV - INVESCO CA VALUE MUNI COMMON
NG - NOVAGOLD RESOURCES
TV - GRUPO TELEVISA
YOD - YOU ON DEMAND HOLDINGS
CERPQ - CEREPLAST INC
AVT - AVNET
PRFT - PERFICIENT
DDE - DOVER DOWNS GAMING
GYST - THE GRAYSTONE CO
KTOVW - KITOV PHARAMCEUTICALS HOLDINGS LTD WTS
EGI - ENTREE GOLD
DROP - FUSE SCIENCE
ADRO - ADURO BIOTECH
NEOM - NEOMEDIA TECHS INC
ECOP - ECO-SHIFT POWER CORP
EOD - WELLS FARGO GLOBAL DIVIDEND OPPORTUNITY
VGM - INVESCO MUNI INVEST GRADE T CO
VTTI - VTTI ENERGY PARTNERS LP
MVT - BLACKROCK MUNIVEST FUND II COM
JRJR - JRJR NETWORKS
NWHM - THE NEW HOME CO INC
BRDT - BREEDIT CORP
BONE - XTANT MEDICAL HOLDINGS
SGOC - SGOCO GROUP
CACH - CACHE INC COMMON
HJOE - HANGOVER JOES HOLDING CORP
SA - SEABRIDGE GOLD
PMC - PHARMERICA
BGNN - B GREEN INNOVATIONS
MSPC - METROSPACES
HCN-J - WELLTOWER INC 6.50
LIWA - LIHUA INTL
LVVV - LIVEWIRE ERGOGENICS
MHCC - MILLENNIUM HLTHCRE
XRX - XEROX
[...]

and it goes on from there…

A quick scan shows a lot of metals and miners along with some oils and oil services. Then there’s the odd ‘bank in trouble’ bits. Also the “government screwing with” Healthcare players.

Overall, it looks like more dross than gems. But we’ll pick one or two to chart and see what comes of it.

REMINDER: I am NOT a licensed anything financial. I do NOT offer ‘stock or investment advice’. I’m just a guy showing what he does with his own money and how he finds and evaluates potential stocks and funds. For educational purposes only, and that education may come by my being 100% wrong on something so you get to learn by NOT experiencing it…

Having tried a bunch of the tickers, it really is mostly crap, IMHO. Lots of things that have had a ‘pop and drop’ and are now in what I call a ‘bottoming weave’. Some of those recover. Most of them are in the “He’s Dead Jim” bucket. I didn’t find one looking like ‘near a top and roll off soon’ but there were a couple of ‘top a while a go and why didn’t you get out then?’. That was always my complaint about 50 vs 200 day moving average comparisons. By the time you have any action in the averages, the trade event is a quarter or half year in the rear view mirror…

OK, a couple of the better charts:

WNR 3 year daily chart 16 Oct 2016

WNR 3 year daily chart 16 Oct 2016

Yield is 5% and PE just under 10. Over 9 $Billion of turnover:


Western Refining, Inc.
123 West Mills Avenue
Suite 200
El Paso, Texas 79901

Industry
Oil & Gas Products/Services
Sector
Companies on the Energy Service
Fiscal Year-end
12/2016

Revenue
$9.79B
Net Income
$406.76M
Employees
7,347

Western Refining was performing in line with the S&P 500 and Russel 2000, then fell out of bed on low oil prices, and now is showing signs of recovery as OPEC gets their act together a little bit. I’d compare it to other integrated oils and refiners first, but it’s an interesting idea indication at this point.

Compare

PDS 3 year daily 16Oct2016

PDS 3 year daily 16Oct2016

Precision Drilling Corp. No PE. No dividend. Looks like it’s crashed and is laying on the bottom. <a href="http://www.marketwatch.com/investing/stock/PDS/profile&quot; target="_blank"The profile sure looks like it’s dead meat for now.

Revenue
$1.56B
Net Income
$-363.44M

Losing 1/3 $Billion out of 1.5?

Pretax Margin
-36.40
Net Margin
-23.36
Return on Assets
-6.70
Return on Equity
-15.93
Return on Total Capital
-8.46
Return on Invested Capital
-8.46

Yuck! It could make a bundle… someday… maybe… if oil drilling every got so hot again that they were in high demand. But now? I’d prefer to wait… crossover or no.

How about Xerox?

XRX 3 year daily 16oct2016

XRX 3 year daily 16oct2016

Like the others, way under performing the SPY and RUT broader markets. To me, it looks like it’s just laying on the bottom and wobbling.

In Conclusion

Generally I find this particular search screen not very useful. It finds a lot of wounded companies in a bottom weave, a few maybe able to breakout and recover if their cyclic industry cycles, and a lot of useless names. Yet many folks like the 50 / 200 day crossovers.

IMHO, it is best used only on major averages of stocks where it indicates the turning of the business cycles. We rarely have economic periods where the whole market is having a near death experience for several years (decades?) so calling swings does more that’s useful. I use a long duration 3 line SMA stack for something similar. See that very first chart of SPY. It has 20 40 and 60 week moving average lines. It is fairly easy to spot long uptrends and inflections. I chose to be out when red is on top, in when red is on the bottom, and do faster trades when the lines are weaving. (Sometimes I’ll use other durations on the SMAs too, like 15, 30, 45 – it depends on the ticker and what makes clean indications historically). For most of the last year we’ve been in a weaving do-faster-trades range. Heading into a high inflection potential election, I’d rather just be out and watch for a while…

This has been an example of how I find a potentially interesting tool, then see what it says to me, compare that with the fundamentals and with long term broad market trend charts, and try to find places where that tool would be useful. For this particular one, it found one interesting segment (out of about 8 tickers I looked at) and showed many companies of little value. Perhaps good for shorting against better stocks. In any case, it isn’t an indicator high on my list of ‘things to use today’.

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About E.M.Smith

A technical managerial sort interested in things from Stonehenge to computer science. My present "hot buttons' are the mythology of Climate Change and ancient metrology; but things change...
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4 Responses to Golden Cross – Death Cross

  1. pg sharrow says:

    Long ago, before a desktop computer was available to me and I had a lot of free time and 5 years of Wall Street Journal on hand, I attempted to examine the market gyrations and seemed to see a 5 quarter swing in large cap stocks. 5 up followed by 5 down, 5 up then 5 down. My guess was that fiduciaries had a 5 quarter collective memory, All of them travel in the same circles and exchange the same information so they tend to move in the same investing direction. This only worked on the big caps although sectors also seemed to move in and out of favour to a similar beat.
    World affairs as well as markets are set for major chaos. Maybe time for the investment officer to shift his attention…pg

  2. E.M.Smith says:

    @P.G.:

    I’m planning on the two weeks before the election to ‘get serious’ on markets again. So far there isn’t a lot of pattern to work with. The Fed has inflated paper assets about as much as it can. “Below Zero” interest rates are not gonna fly here… They’ve also hinted at December as the first raise date (and it would make sense to get one in before the next President takes over).

    That will likely cause a turn down, and we’re presently at ‘too high for earnings’ with a debt hangover and slowing sales. All looking for down…

    But, there’s that pesky election that will rejigger the whole works, or not… so nobody will be making big bets before then… though sometimes a week or so before the election if it’s clear what way it will go folks start to average in and markets start to move…

    That will be our first indicate of likely post election direction. Well, that, and if Putin starts shooting down US planes over Syria …

    There are a lot of folks who look at the annual report and react. By definition, they can’t react until more than 12 months since the last one, or in the 5th quarter… maybe that’s what you detected…

  3. H.R. says:

    I mentioned on another comment thread that I had the good fortune to cash out my 401k at the top and will be staying in cash until after the election.

    There is a stark difference between the Hillary and Trump economic plans: more ‘free’ stuff and bigger government vs freeing corporations from collecting excessive taxes for the government and allowing us deplorables to keep more of our own money.

    Meanwhile, I am trying to decide where to jump after the election is decided. Subsidy farming business are probably going to take a big hit.

    Armaments will be a good buy because there will be war (Hillary) or rebuilding (Trump). I’ll put some money there for sure, regardless of who wins, but I’m probably too late. I’m not the smartest guy in the room when it comes to the markets, so the pros are already ahead of me.

    We shall see.

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