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S&P 500 Nears ‘Ultimate’ Death Cross: SocGen

The S&P 500 index is on the verge of hitting an “ultimate” death cross, where the market’s 50-month moving average falls below the 200-month average, according to a research note by Societe Generale.

Death Cross
Nicholas DeVore | Stone | Getty Images

A death cross is the shape made on a chart when a market’s long-term moving average breaks above its short-term moving average or support level. It is seen as a sign of a looming bear market, or a cue to sell.

In the Societe Generale note, published on Monday, strategist Albert Edwards said the last time the S&P 500 came close to a monthly death cross was in 1978, “towards the end of the 1965-82 secular bear market.”

Edwards added that Japan suffered a monthly death cross in 1988, “and 14 years later we are still in the firm embrace of the bear.”

 S&P 500 Nearing Ultimate Death Cross: SocGen
S&P 500 Nearing Ultimate Death Cross: SocGen

In a further recessionary sign , Edwards said aggregate monthly analyst optimism data had slid below 2011 and 2010 lows to under 40 percent. “These data are entirely consistent with a U.S. already in recession,” he said.

For another look at the S&P 500, click here.

— By's Katy Barnato