Does the golden cross work? A backtest on 3,000 stocks
The golden cross is one of the most quoted signals in trading: the 50 day moving average crosses above the 200 day, and the trend has supposedly turned. We tested every golden cross in liquid US stocks from mid 2018 to May 2025, then checked the 18 months after that separately.
No edgeStocks did slightly worse than the average stock after a golden cross, and the result flipped in the most recent 18 months.
Signals6,780
Vs the average stock, 60 days−0.40%
Trades that made money52.8%
Median trade+1.1%
Most trades made a little money because stocks rose over this stretch. The real question is whether a golden cross picked better stocks than a random choice on the same day. It did not.
The rules we tested
Signal: the 50 day moving average closes above the 200 day, after being below it the day before.
Entry: buy at that day’s close. Exit: sell 60 trading days later.
Stocks: US stocks above $10 trading at least $20 million a day on average, including companies that later stopped trading.
Judged against: the average eligible stock over the same days, after a 0.1% round trip cost, and against random stocks bought on the same day.
Golden cross result by year, against the average stock (60 days)
*2025 runs to May.
Only 2020 was clearly positive, when stocks crossing up after the crash rebounded hard.
What about the death cross?
The death cross is the opposite: the 50 day falls below the 200 day, usually read as a sell signal. Across 7,577 death crosses, stocks did 0.67% better than the average stock over the next 60 days, and 60% of them were higher. Selling on a death cross has often meant selling near a short term low.
In the most recent 18 months the death cross did lag, by 1.30%, so it has not been a reliable buy signal either.
The most recent 18 months
In the most recent 18 months, which we held back and checked separately, the same rules gave 1,877 trades and +0.85% against the average stock, with 55.8% of trades making money. That is not enough to tell apart from luck.
What it means for your trading
A golden cross is a late signal. By the time the averages cross, the stock has usually been rising for months.
It is fine as context on a chart, but not a reason to buy on its own.
Of everything we tested, buying the stocks with the strongest 12 month gains held up best.
Limits: daily closes from mid 2018, which includes one bear market (2022). Results are averages over thousands of trades; any single trade can do far better or worse.
In our test of 6,780 golden crosses in US stocks from 2018 to May 2025, stocks did 0.40% worse than the average stock over the next 60 trading days. It did not pick better stocks than a random choice on the same day.
Is the death cross a sell signal?
Not in our test. Stocks did 0.67% better than the average stock over the 60 trading days after a death cross, and 60% of them were higher.
Does the golden cross work on the S&P 500 index?
This test covers single stocks. Golden crosses on the index itself happen only a few times a decade, which is too few to test the same way.
Backtest results are hypothetical. They are based on historical prices, include a simple trading cost and leave out taxes and other costs of real trading. Past results do not guarantee future returns. For informational and educational purposes only. Not investment advice, and not a recommendation to buy or sell any security.