The S&P 500 hit a “death cross” on Monday, which occurs when the index’s 50-day moving average falls below the 200-day number. This death cross has the index’s 50-day moving average hitting roughly 4,465, below its 200-day moving average of 4,467. And while this could be seen as grim news for equity markets, it could present an opportunity for longer-term investors.

A report from Barron’s notes that the S&P 500 tends to post gains in the 12 months after an initial close in a death cross. In fact, according to Dow Jones Market Data, the index has seen an average gain of 6.3% during this time span, the 53 times the index has hit death-cross territory.

Citing research from Fundstrat, Barron’s reports that 12 months after a death cross, gains historically occur about two-thirds of the time. When losses do occur, they’re usually just prior to a recession. In November 1929, for example, the index entered a death cross before dropping 23.5% for the following year. And in December 2007, the index entered that territory and then fell 41.5%.

The index can remain in a death cross for some time (the average period is 155 trading days). But gains do materialize. The last time the index reached death-cross territory was March 30, 2020, when the pandemic set in. Twelve months after that point, the index gained more than 55%.

At some point, the macroeconomic risk that sends stocks lower becomes reflected in their prices. And if corporate earnings are still growing, stocks will eventually resume rising.

For more news, information, and strategy, visit the Core Strategies Channel.