Tags: Golden | Cross | buy | stocks

It’s Time to Smile at the Golden Cross (And Start Buying Stocks)

By    |   Friday, 03 February 2012 07:14 AM

Many tell me about the risk in buying stocks.

I tell them a simple story that I will repeat to you.

You can buy a 10-year U.S Treasury bond that pays 2 percent annually from a country that is $15 trillion in debt and has deficits or more than $1 trillion.

But somehow, a company that pays a 3 percent to 5 percent dividend and makes more than $10 billion annually and has more cash than long term debt is somehow risky?

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I’m not one for too much technical analysis — I leave those tools to day traders — but I love when certain indicators confirm what I have personally believed.

The so-called “Golden Cross” was triggered in the S&P 500 Index on Tuesday.
The “cross” happens when the 50-day moving average rises above the 200-day moving average, which is generally a positive development.

In the past 50 years, the cross has happened 26 times, and the market reacted higher 81 percent of the time. That’s in line with what I expect: an upward trend in the markets.

I have been telling folks for the past six months that it is great time to buy stocks from a fundamental or valuation reason.

Combine that with a technical reason and the fact that France, Germany and the United States have elections and equity buyers who have chosen a wise adviser should be smiling during the next year or so.

About the Author: Bill Spetrino

Bill Spetrino is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of the Dividend Machine. Discover more by Clicking Here Now.

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Friday, 03 February 2012 07:14 AM
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