Death Cross
A bearish signal when the 50-day moving average crosses below the 200-day moving average.
What is Death Cross?
A death cross occurs when a shorter-term moving average — typically the 50-day — crosses below a longer-term moving average — typically the 200-day. Technical analysts interpret this as a bearish momentum signal, suggesting near-term selling pressure has overtaken longer-term buying interest and that a sustained downtrend may follow. Like all moving-average signals, the death cross is a lagging indicator: it is based on historical prices and often appears after much of the decline has already occurred. Research on its predictive power is mixed. It is most useful as a trend confirmation tool when accompanied by rising trading volume and deteriorating fundamentals.
Example
In March 2020, the S&P 500's 50-day moving average crossed below the 200-day moving average as the COVID-19 pandemic caused a rapid market selloff. The death cross appeared when the index had already fallen approximately 25% from its February peak. Rather than signaling the start of the decline, it confirmed the severity of the downturn. The S&P 500 reversed sharply just weeks later, illustrating the death cross's limitations as a forward-looking signal.
Source: Investopedia — Death Cross