Many of the major U.S. equity exchange traded funds are experiencing a positive technical signal known as a bullish or golden cross, in which the 50-day exponential moving average rises up through the 200-day average.
Despite the Eurozone debt concerns, sovereign debt downgrades, high unemployment levels and the escalating drama in the Middle East, the bulls may point to a notable technical indicator. Stocks are off to a good start in 2012, although trading volume has been light. [How to Navigate Uncertain Markets with an ETF Strategy]
Large-cap ETFs such as SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) and iShares S&P 500 (NYSEArca: IVV) have made bullish crosses recently.
In small-cap stocks, a golden cross is now only a session or so away for the Russell 2000, technical analyst Tarquin Coe said Wednesday.
“Though the signal is bullish, they sometimes prove to be false. Either way, a big move usually follows their convergence,” the Investors Intelligence analyst wrote in a newsletter. “The small-caps continue to trade flat on a relative basis versus the Dow Jones Industrials. That is not indicative of a bull market since the more speculative stocks typically lead to the upside in such a climate. However, should the relative chart break higher it would improve the general market outlook considerably.”
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Max Chen contributed to this article.