On January 29, we highlighted lists of stocks exhibiting golden and iron crosses. According to technical analysts, stocks which have a golden cross will continue to rise, while stocks with iron crosses should be sold. As the results in the table below show, an investor would have done quite well buying the stocks with golden crosses, achieving a gain of 5.88% and outperforming the 2.59% rise in the market (based on the return of SPY). While the golden crosses handily outperformed the market and therefore supported the rule, iron crosses were not as cooperative but also outperformed (although in their case it was to a much smaller degree (2.85% vs 2.59%)).
Given that it has only been one test, it’s still too early to come up with any conclusions based on the mixed results we calculated, as a host of outside factors such as the market’s direction over the time period analyzed are also likely to have an impact on returns of each list. With that caveat in mind, we ran the same screen on S&P 1500 names (below), and will once again check on the returns at a later date.