Golden Cross S&P500 and Nasdaq 100 Analysis 2025

A golden cross in the context of stock market technical analysis occurs when the 50-day simple moving average (considered short-term) crosses upwards over the 200-day simple moving average (considered long-term). This cross is interpreted as a bullish entry signal. The entry signal is generated at the moment the cross occurs. Conversely, when the short-term average crosses downwards over the long-term average, it is considered an exit signal. This bearish signal is sometimes referred to as a "death cross."


This trend-following system does not perform well in sideways market movements, as it can generate multiple buy and sell signals that result in negative trades. The system is designed to take advantage of bullish and bearish trends, acting as a "protective" during market declines.


Results were presented from a backtesting analysis of the golden cross on the SP500 since 1928, where 49 trades were generated, with a 67.35% accuracy rate. The system's annualized return was 6.27%, slightly higher than the "buy and hold" strategy (6.02%). The expected profit per trade was 15.40%. The system's worst maximum drawdown was -36.88%, considerably lower than the -86.19% of the "buy and hold" strategy. The most recent trade on the SP500 ended on April 14 with a gain of 29.34%, after 551 trading sessions.


For the Nasdaq 100, since 1985, 25 trades were generated, with a 68% accuracy rate. The annual return was 12.32%, lower than the 13.19% "buy and hold" rate. However, the expected profit per trade was very high, at 27.53%. The worst maximum retracement for the system was -41.90%, also lower than the -82.90% "buy and hold" rate. The last trade on the Nasdaq 100 closed on April 14 with a gain of 57.64%, after 525 trading sessions.


The SPY ETF (referenced to the SP500) since 1993 and the QQQ (referenced to the Nasdaq 100) since 1999 were also analyzed. For the SPY, 14 trades were generated with a 78.57% accuracy rate. The annual return was 8.01%, similar to the 8.02% of the underlying ETF. The expected profit per trade was 22.68%. The worst maximum drawdown was -34.10%, less than the -56.47% of the SPY buy-and-hold. The last trade closed on April 14 with a gain of 29.35%.


Regarding the QQQ, 16 trades were generated with a 62.50% accuracy rate. The annual return was 9.63%, higher than the 8.65% of the QQQ buy-and-hold. The expected profit per trade was 18.43%. The worst-case system retracement was -28.55%, significantly lower than the -82.98% of the QQQ buy-and-hold. The last signal on the QQQ indicated an exit.


It is important to note that these backtesting results do not include commissions, dividends, or taxes. Furthermore, it is emphasized that the information presented does not constitute financial advice or recommendations to buy or sell, but is for educational purposes only. It is emphasized that the simplicity of the golden cross strategy has historically proven effective in trending markets.


The philosophy behind this analysis suggests that attempting to complicate simple strategies with multiple indicators can lead to over-optimization and not necessarily improve results. It is mentioned that macroeconomic events have always existed and will continue to exist, affecting markets both upwards and downwards, but the golden cross strategy has proven to work throughout different historical periods.


Disclaimer: This video is published by WallStreetUncovered and is for informational/educational purposes only. It does not constitute financial advice or personalized investment recommendations made through this channel. This video does not constitute a prospectus or public offering. The WallStreetUncovered channel assumes no responsibility, express or implied, for the truth/accuracy of the information provided for any individual's investment decisions. The opinions expressed in this video reflect solely our personal judgment and may change without notice. Investing involves risk, and each investor is responsible for their own decisions.