The S&P 500’s “death cross” pattern, a technical signal that predicts a potential downtrend, may not be as ominous as it sounds. Historically, the worst of the decline often occurs before the death cross appears. In fact, data suggests that about 54% of death crosses occur after the index’s maximum intraday decline, meaning the worst of the slide had already happened.
While some severe losses have followed death crosses in the past, many have resulted in quick V-shaped recoveries. Analysts point to signs of market capitulation recently, implying selling pressure might be easing. The severity of the selloff the market has endured and high levels of bearish sentiment may indicate a turning point rather than a prolonged downturn.
In recent years, death crosses have led to significant declines in the S&P 500, with an average loss of 0.5% 20 days after the signal. However, 30 days later, the index was higher 60% of the time, with an average gain of 0.8%. The latest reading from these technical indicators suggests that a selling crescendo might be over and a V-shaped recovery is more likely.
Source: https://www.reuters.com/markets/us/sp-500s-looming-death-cross-may-not-be-ominous-it-sounds-analysts-say-2025-04-14