Looks like the 'Golden Cross' isn't so golden after all

In the land of Hindenburg Omens, January Barometers and Super Bowl Effects, few supposed indicators get investors' toes tapping as much as the Golden Cross.

The indicator happens when short-term moving averages (often the 50-day version) cross above a longer-term average (usually the 200-day). The resulting effect is supposed to be a big rally on Wall Street as the market absorbs all the enthusiasm over stocks.

This is important now because the closely watched Dow Jones industrial average has just experienced the vaunted "cross," triggering hopes for an even greater rally off what has been a strong 2½ months. There hasn't been a Dow Golden Cross for more than four years. (The Golden Cross's evil twin is known as the "Death Cross," which involves the shorter-term moving average breaking below the longer-term.)

Turns out all the hoopla may be for naught.

A closer look at the history of the Golden Cross in fact shows little predictive power. Sometimes the market goes up afterward, sometimes it goes down, at least for the one-month and three-month periods ahead. The results have been more consistently positive over a six-month period, but such a long duration makes tying it to a technical market event at least a little specious.