Nasdaq's recent 'golden cross' is bullish signal for rest of April: Wall Street A.I. trading tool

  • A stock market trading analysis run by Wall Street machine-learning tool Kensho shows that the Nasdaq continues on a bullish streak after it experiences a "golden cross."
  • Last week the S&P 500 experienced a golden cross for the first time in three years.
  • Since 1980, the Nasdaq has experienced a "golden cross" 16 times and the index has continued higher 75% of the time, according to a CNBC analysis of Kensho,

The Nasdaq Composite joined recent rallies in other U.S. stock markets with its own "golden cross" during the first week in April.

Here's what that term means:

When the short-term moving average (usually 50-day) of an index or security crosses above a long-term moving average (usually 200-day).

Last week the S&P 500 experienced a golden cross for the first time in three years. In late March the Dow Jones Industrial Average saw the closely watched trading pattern unfold.

Investors have typically viewed this as a bullish sign that gains will continue.

Since 1980, the Nasdaq has experienced a "golden cross" 16 times and the index has continued higher 75% of the time, according to a CNBC analysis of Kensho, which provides a trading analytics tool used by Wall Street banks and institutional investors.

On average, the Nasdaq was up more than 2% a month later. The S&P 500 also performed well in that one-month period.

Since the Nasdaq hit the golden cross last Wednesday, it has continued higher, up 0.87% over the past five trading days since last Thursday and positive in three of the five trading sessions.

Following Nasdaq "Golden Cross"
Following Nasdaq "Golden Cross"

Stocks already have rallied off their late December lows in 2019, a bullish period attributed primarily to the Federal Reserve pause in interest-rate hikes and building investor optimism for a trade deal between the U.S. and China.

On Wednesday, Fed minutes from its March monetary meeting were released and showed that the central bank intends to keep rates unchanged for the rest of the year. The Nasdaq finished up 0.7% on Wednesday.

"A majority of participants expected that the evolution of the economic outlook and risks to the outlook would likely warrant leaving the target range unchanged for the remainder of the year," the minutes said.

On market expectations for a trade deal between the U.S. and China, Treasury Secretary Steven Mnuchin told CNBC on Wednesday that the U.S. and China have "pretty much agreed on an enforcement mechanism" for when a deal is struck and said recent talks between the two countries have been "productive," though he would not set a deadline for when a deal could be reached.