Golden Cross Strategy (50-day and 200-day moving averages)
The golden cross rule on the S&P 500. It holds the S&P 500 while its 50-day moving average is above its 200-day moving average, and Treasury bills after the 50-day average falls below, the signal traders call a death cross.
A technical analysis rule with no single author, watched by traders for decades. Implemented and tracked by Tactfolio.
| May 2007 – Sep 2026 | Strategy | SPY |
|---|---|---|
| Annual return (CAGR) | 9.0% | 10.7% |
| Worst drawdown | -33.7% | -55.2% |
| Sharpe ratio | 0.68 | 0.62 |
| Volatility | 14.1% | 19.7% |
| Annual return since publication (Oct 2023) | 17.2% | 23.4% |
| Jan 1960 – Sep 2026 | Strategy | SPY |
|---|---|---|
| Annual return (CAGR) | 9.7% | 10.6% |
| Worst drawdown | -33.7% | -55.2% |
| Sharpe ratio | 0.81 | 0.70 |
| Volatility | 12.4% | 16.4% |
| Annual return since publication (Oct 2023) | 17.2% | 23.4% |
The golden cross is a classic technical signal: a market's 50-day moving average rising above its 200-day moving average. The opposite, the 50-day average falling below the 200-day, is known as the death cross. It has no single author; traders and the financial press have followed it for decades. As a strategy on the S&P 500, the rule is simple: hold stocks after a golden cross and Treasury bills after a death cross.
The idea#
A moving average smooths out daily noise, and comparing a short one with a long one shows the direction of the trend. When the 50-day average climbs above the 200-day, recent prices are running ahead of the longer trend, which traders read as the start of an uptrend. When it drops below, the trend has turned down and the rule steps aside.
Comparing two averages is slower than comparing the price itself with the 200-day average. The golden cross trades less often and suffers fewer false signals, but it gets out later and back in later.
How it works#
At the close of every trading day:
- Compute the 50-day and 200-day simple moving averages of the S&P 500 (SPY).
- If the 50-day average is above the 200-day average, hold SPY.
- Otherwise, hold Treasury bills (BIL).
What the backtest shows#
With real prices the test starts in mid-2007. Since then the golden cross returned about 9% a year, against about 11% for the S&P 500 and 8% for a 60/40 portfolio. Its risk-adjusted return beat the S&P 500's but trailed the 60/40 portfolio's.
The rule did what it promises in 2008, finishing up about 2% while the S&P 500 lost 37%, and in 2022, when it lost 7% against 18%. Its slowness showed in 2020. The crash in February and March was over in about a month, too fast for the averages to cross, so the strategy took the whole 34% fall. The death cross then came near the bottom and it bought back months later, ending the year down about 5% while the market gained 18%. That fall was its worst drawdown, and it recovered in April 2021. The same pattern cost it in 2025, when it gained about 1% against 18% for the market.
The rule has no publication date. Over the most recent stretch, since October 2023, it returned about 17% a year with a strong risk-adjusted return.
With simulated history the test starts in 1960 and returns about 10% a year, a little below the S&P 500's 10.5%, with a better risk-adjusted return. It stayed nearly flat through 2000–02 while the market fell three years in a row, and gained 8% in 1974 while the market fell by a quarter. Even over this longer span its worst drawdown remains the 2020 crash.
When it struggles#
- Fast crashes. Two averages take weeks to cross, so a crash that happens within a month is taken in full.
- V-shaped recoveries. The golden cross often returns only after much of a rebound has passed.
- Sideways markets. When the averages converge, crosses can come in quick succession.
Using it on Tactfolio#
The live strategy checks the averages each day on SPY and holds BIL as cash. Copy it to try other pairs of averages, exponential averages, or other markets.
Year by year
| Year | Strategy | SPY |
|---|---|---|
| 2026* | 14.0% | 14.0% |
| 2025 | 1.0% | 17.7% |
| 2024 | 24.9% | 24.9% |
| 2023 | 19.4% | 26.2% |
| 2022 | -7.1% | -18.2% |
| 2021 | 28.7% | 28.7% |
| 2020 | -4.5% | 18.3% |
| 2019 | 16.6% | 31.2% |
| 2018 | 0.8% | -4.6% |
| 2017 | 21.7% | 21.7% |
| 2016 | -0.5% | 12.0% |
| 2015 | -4.4% | 1.2% |
| 2014 | 13.5% | 13.5% |
| 2013 | 32.3% | 32.3% |
| 2012 | 10.5% | 16.0% |
| 2011 | -4.1% | 1.9% |
| 2010 | 2.8% | 15.1% |
| 2009 | 22.9% | 26.4% |
| 2008 | 1.6% | -36.8% |
| 2007* | -2.8% | -3.4% |
| Year | Strategy | SPY |
|---|---|---|
| 2026* | 14.0% | 14.0% |
| 2025 | 1.0% | 17.7% |
| 2024 | 24.9% | 24.9% |
| 2023 | 19.4% | 26.2% |
| 2022 | -7.1% | -18.2% |
| 2021 | 28.7% | 28.7% |
| 2020 | -4.5% | 18.3% |
| 2019 | 16.6% | 31.2% |
| 2018 | 0.8% | -4.6% |
| 2017 | 21.7% | 21.7% |
| 2016 | -0.5% | 12.0% |
| 2015 | -4.4% | 1.2% |
| 2014 | 13.5% | 13.5% |
| 2013 | 32.3% | 32.3% |
| 2012 | 10.5% | 16.0% |
| 2011 | -4.1% | 1.9% |
| 2010 | 2.8% | 15.1% |
| 2009 | 22.9% | 26.4% |
| 2008 | 1.6% | -36.8% |
| 2007 | 5.8% | 5.1% |
| 2006 | 12.7% | 15.8% |
| 2005 | 4.8% | 4.8% |
| 2004 | 8.6% | 10.7% |
| 2003 | 19.0% | 28.2% |
| 2002 | -0.6% | -21.6% |
| 2001 | 3.3% | -11.8% |
| 2000 | -1.3% | -9.7% |
| 1999 | 20.4% | 20.4% |
| 1998 | 8.0% | 28.7% |
| 1997 | 33.5% | 33.5% |
| 1996 | 22.5% | 22.5% |
| 1995 | 38.0% | 38.0% |
| 1994 | -4.2% | 0.4% |
| 1993 | 9.7% | 9.7% |
| 1992 | 7.6% | 7.6% |
| 1991 | 20.0% | 30.3% |
| 1990 | -10.2% | -3.2% |
| 1989 | 31.5% | 31.5% |
| 1988 | 7.6% | 16.4% |
| 1987 | 3.7% | 5.1% |
| 1986 | 18.6% | 18.6% |
| 1985 | 31.6% | 31.6% |
| 1984 | 0.5% | 6.2% |
| 1983 | 22.4% | 22.4% |
| 1982 | 25.0% | 21.6% |
| 1981 | -1.9% | -4.9% |
| 1980 | 23.5% | 32.4% |
| 1979 | 12.8% | 18.3% |
| 1978 | 2.8% | 6.5% |
| 1977 | -2.7% | -7.2% |
| 1976 | 23.8% | 23.8% |
| 1975 | 13.3% | 37.1% |
| 1974 | 8.0% | -26.5% |
| 1973 | -14.3% | -14.7% |
| 1972 | 16.7% | 18.9% |
| 1971 | 6.2% | 14.1% |
| 1970 | 15.3% | 3.9% |
| 1969 | -6.2% | -8.4% |
| 1968 | 1.8% | 10.9% |
| 1967 | 15.8% | 23.8% |
| 1966 | -3.5% | -10.1% |
| 1965 | 8.6% | 12.4% |
| 1964 | 16.4% | 16.4% |
| 1963 | 22.7% | 22.7% |
| 1962 | -9.2% | -8.8% |
| 1961 | 26.8% | 26.8% |
| 1960* | -10.8% | 0.4% |
* Partial year.
The rules as implemented
This is the exact tree Tactfolio runs, rebalanced daily with signals and trades at the close. Open it to inspect or copy it.
- StrategyGolden Cross 50/200
- WeightEqual
- If50d moving average of SPY is above 200d moving average of SPYThen
- WeightEqual
- TickerSPY
Otherwise- WeightEqual
- TickerBIL
- WeightEqual
- If50d moving average of SPY is above 200d moving average of SPY
- WeightEqual
Sources and caveats
- TOS Indicators, Golden Cross Trading Strategy: 20-Year Backtest Results (2023)
- QuantifiedStrategies, Golden Cross Trading Strategy
- The golden cross is a long-standing technical rule with no single author; the sources are representative tests of the standard 50-day and 200-day simple averages on the S&P 500.
- SPY stands in for the S&P 500 and BIL for cash.
- Signals and trades use each day's close.
Common questions#
What is a golden cross?#
A golden cross happens when a market's 50-day moving average rises above its 200-day moving average. A death cross is the reverse, when the 50-day average falls below the 200-day.
Does the golden cross strategy beat buy and hold?#
Not on return in these tests. Since 2007 it returned less than the S&P 500 with a smaller worst drawdown, and in simulated history since 1960 it trailed the market slightly while taking less risk.
Is the golden cross better than the 200-day moving average?#
It trades less often but reacts more slowly. In simulated history since 1960 the 200-day moving average rule returned a little more with a smaller worst drawdown, but it suffered more whipsaws in choppy years such as 2007 and 2011.
How often does the golden cross happen?#
It varies with the market. In a steady trend the strategy can hold the same position for years, while a choppy market can bring a death cross and a golden cross within a few months.