Golden Cross Pattern in Dow Signals Prosperous New Year
On Friday investors put the old year to bed, and looked for signs as they anticipated what the baby new year might bring.
Considering the market had been trading on technicals in 2011, the Fast Money pros suggest watching the charts carefully again in 2012.
And Bespoke recently noted a pattern that the Fast pros thought was very significant.
Looking at the Dow , the 50-day moving average has started to break above the 200-day; something known on the Street as a Golden Cross.
According to the Bespoke research – in the last 50 years that pattern has only presented itself on the Dow about 20 times.
And here’s the important part – after seeing the pattern, 13 times the Dow has been higher 6 months later.
If the analysis plays out, odds are greater than 50% that 2012 will be a good one for the bulls.
Should this technical 'tell' influence the way you position your portfolio?
“I’m a believer,” says trader Mike Murphy. "I think the golden cross will be backed up by strong domestic fundamentals."
Murphy is among a growing number of pros who are predicting a 'dawn of the American decade' with the US making a comeback in manufacturing.
As a result, Murphy is bullish on a slew of sectors including housing, construction and transportation. Specifically names he likes include Terex, Manitowoc and USG.
"I'd be a buyer of the United States of America in 2012."
Jon Najarian agrees entirely.
In addition to the relative healthy economic signs that have started to manifest, he thinks a high profile case involving substandard drywall made in China, will also drive more companies to buy domestically. “I think we’ll see a lot of companies buying US,” he says.
Gina Sanchez of Roubini shares the view. “We’d also focus on US,” she says.
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Trader disclosure: On Dec 30, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Najarian is long AAPL; Najarian is long C; Najarian is long GOOG calls; Najarian is long HPQ; Najarian is long MRK; Najarian is long PFE; Najarian is long GE; Najarian is long INTC; Murphy is long AAPL; Murphy is long INTC; Murphy is long AKS; Murphy is long TEX; Murphy is long CHK; Murphy is short MHK
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CNBC.com with wires.