The Appearance of Golden Crosses in 2012 and What It Means

There is something very fascinating occurring in the markets, golden cross formations are in various states of development in the U.S. stock market and oil market. I don't pay attention to most technical signals, other than things like head and shoulders formations, which can be explained in terms of human action. However, golden cross formations developing in key markets are quite intriguing.

A golden cross formation occurs when a 50-day moving average of price activity crosses over a 200-day moving average. This indicates that upside price activity over the recent 50 days is more intense to the upside than it was over the last 200 days ago.

If this occurs in one commodity, it is an interesting thing to watch relative to that commodity, but when it is occurring relative to oil and the US stock market, it is suggesting an across the board increase in upside price pressure.

Even more fascinating is that these golden cross movements don't occur that often. In oil, these crosses have only occurred seven times since 1984.

In the case of the Dow, according to the Bespoke research,  in the last 50 years, the golden cross on the Dow has only occurred about 20 times.

I don't view these golden cross formations as necessarily predicting strong markets ahead, by themselves,, BUT it is telling me that upward price activity is intensifying in these two key markets. If I couple this with the fact that Ben Bernanke has been printing money aggressively in recent months, it suggests to me that Bernanke's money printing is indeed making it into the markets. I believe the money in the system is strong enough to keep markets strong for some time, and if Bernanke keeps up the money printing, price activity to the upside for the stock market, oil and most other commodities will be very strong at least for the first part of 2012.