“GOLDEN CROSS” AS "GOLDEN OPPORTUNITY"

SENSEX

Click on the above chart for larger view.

On last monday we have mentioned on our blog that we are waiting for "GOLDEN CROSS". Now why we are giving so much importance to this??? I tried to explain it in simple manner with some Questions and Answers which are as follows, kindly read it and you can mail me your comments on marketgyaan@gmail.com

WHAT IS THE HISTORY OF GOLDEN CROSS???

-->Let us discuss the history of GOLDEN CROSS. In history of the stock market whenever this GOLDEN CROSS happened the major bull market has started every time. Last time when the GOLDEN CROSS happened on 24th November 2004 then after the major rally/bull market started which ended on 21st January 2008, which was lasted for exactly 4 years.

NOW WHAT GOLDEN CROSS CONSISTS???

-->It consist two simple moving averages. 1st is 100 DMA (Days Moving Average) & 2nd is 200 DMA (Days Moving Average). Both 100 & 200 DMAs are very much important in Technical Analysis.

WHY IT IS IMPORTANT???

-->Whenever 100 DMA crosses 200 DMA on Upside it usually signs that market is going to start very strong upward rally & "GOLDEN CROSS" term is used for it in Technical Analysis, and whenever 100 DMA crosses 200 DMA on Downside it usually signs that market is going to fall heavily & DEATH CROSS term is used for it in Technical Analysis.

-->In the current scenario the gap between 100 DMA & 200 DMA is narrowing day by day, so I am personally expecting that 100 DMA will cross 200 DMA on upside soon. On 15th May 2009 100DMA crossed 200DMA on down side when SENSEX was at 17366 and then the fall we have seen till October 2008, which was very heavy and it was "DEATH CROSS".

-->Also if you have seen the FIIs trading data from last 2 months then you will see that they have bought over $ 4 Billion equities in cash market. So we are expecting a major bull market is going to start sooner or later in the current year only, but one correction of (may be 1500-2000 points on SENSEX) can not be ruled out completely.

-->When that correction will happen? whether it will happen before GOLDEN CROSS or after GOLDEN CROSS only time will tell us, but it should be consider as life time buying opportunity for Long Term & Medium Term Investors/Traders.

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