Bearish Death Cross

I have received several notifications that the “Bearish Death Cross” occurred yesterday on the Dow Jones Industrial Average.  Let me explain the current situation with the death cross.  First, the death cross that is being discussed is based on the calculation for a simple moving average (SMA), not the exponential moving average (EMA), which is the one that I use.  Second, the difference between the two types of moving averages is as follows: (1) Simple moving average is calculated by adding up a sum of numbers and divided the sum by the number of observations. Each observation has the same weight. That is, with 40 observations, each data value would have a value of 2.5%. (2) Exponential moving average is calculated by giving more weight to the most recent data values than those say 40 weeks ago. This approach makes more sense, since today’s price has factored in all current information that was not available 40 weeks ago.

Therefore, the “Bearish Death Cross” has occurred with the calculation of a simple moving average (SMA) – 15-week SMA < 40-week SMA. However, we do not have the death cross for the exponential moving average -- 15-week EMA > 40-week EMA by 64.39 points. 

My money says to wait for the exponential moving average to signal the “Bearish Death Cross.” As soon as it occurs, I will post the event.