Since November 1993, SPY (the S&P 500 ETF) has returned 10.84% a year, with dividends counted. Its worst drawdown, the largest fall from a peak to a later low, was 55.2%.
A rule that moved to cash at each death cross and bought back at each golden cross returned 9.93% a year on the same fund. Its worst drawdown was 33.7%. This guide explains the death cross and sets out what the rule did on seven funds.
What is a death cross? A death cross is the point where an asset's 50-day moving average falls below its 200-day moving average. A moving average is the mean of the last 50 or 200 daily closing prices.
Holding a fund only while its 50-day average sat above its 200-day average returned less than simply holding on six of seven funds. On one fund, QQQ (the Nasdaq-100 ETF), it returned more.
The same rule had a shallower worst drawdown than holding on all seven funds.
The record describes what the rule did. It gives no advice.
What is a death cross in stocks?
A death cross is a chart event. It happens when the 50-day simple moving average of a price falls below the 200-day simple moving average.
A simple moving average adds up the last n daily closing prices and divides by n. The 50-day average follows recent prices. The 200-day average covers a longer stretch, so it moves more slowly.
Both averages use past prices, so the crossing arrives after a fall has begun. The event can occur in a stock, an index or a fund. The opposite event, when the 50-day average rises above the 200-day average, is a golden cross.
What a death cross looks like
Source: YX Insights
The chart shows one fund, SPY, from January 2007 to December 2010. The grey line is the daily price. The orange line is the 50-day average, while the blue line is the 200-day average.
The first death cross comes as the market starts to fall. Prices keep falling for a long time afterwards. A second death cross appears later. A golden cross reverses it within months.
Our golden cross guide lists every death cross on SPY and the returns that followed each one.
How we tested the death cross
We tested one rule on seven US-listed funds, using daily prices to 16 October 2026. The funds are SPY, QQQ, DIA (the Dow Jones Industrial Average ETF), IWM (the Russell 2000 ETF), GLD (the gold ETF), SLV (the silver ETF) and TLT (the long-term US Treasury bond ETF).
The rule holds the fund while its 50-day average is above its 200-day average. Otherwise it holds cash. A death cross is the move to cash, while a golden cross is the move back in.
The rule reads the signal at the close and earns the next day's move, so it cannot see the future. Each change of position costs 5 basis points, where a basis point is 1/100 of a percentage point. Cash earns nothing.
The 50/200 pair gives the death cross its name. It is one of ten pairs in our test. Each fund's test runs from its first day with a 200-day average, which is where holding starts too, giving 19.6 to 32.9 years.
Did the death cross rule beat holding?
Source: YX Insights
On six of the seven funds, the rule returned less than holding. SPY returned 9.93% a year against 10.84%. IWM returned 2.18% against 8.56%.
QQQ is the exception among the seven. The rule returned 11.21% a year against 8.74% for holding. The edge comes from one event. Holding QQQ had a worst drawdown of 83.0%. The rule's was 36.5%.
That fall is not inside the window that opens on 28 April 2006. In that window, holding QQQ had a worst drawdown of 53.4%. None of the 15 rules we tested on QQQ, five single averages and ten pairs, beat holding on return.
Did the death cross rule cut losses?
In the bottom panel of the chart, the rule had a shallower worst drawdown than holding on all seven funds. On SPY it was 33.7% against 55.2%.
The rule's 33.7% is its fall from 19 February 2020 to 23 March 2020, covered under the sell question below. Holding's 55.2% is the slower fall from 9 October 2007 to 9 March 2009. The rule's loss in that fall stayed smaller than its 2020 loss.
The rule changed exposure between 26 and 44 times per fund, 31 on SPY.
Does the result depend on the 2008 crash?
Partly. We reran all 15 rules on all seven funds from seven start dates between 28 April 2006 and 2 January 2015, each taking a 200-day warmup inside the window before its first trade. That is 105 tests each.
The number of tests with a shallower worst drawdown than holding ranged from 82 to 100 of 105. The two start dates that sit through the 2008 crash in full each gave 100.
The direction held at every start date, but the size of the benefit depends on whether the window contains the 2008 crash. Beating holding on return was rarer. Between 5 and 12 of the 105 tests did so.
Should you sell on a death cross?
This guide cannot say what a reader should do. It can say what the rule did.
On the seven funds tested, acting on the 50/200 signal cost return on six and reduced the worst drawdown on all seven. The rule offered a smaller worst loss in exchange for a lower return on most funds. That makes it a risk trade.
The 2020 crash shows one limit. On SPY, holding fell 33.70% from its peak on 19 February 2020 to its trough on 23 March 2020, over 24 trading days. The 50/200 rule was invested on all 24 of those days and took the same 33.70% fall.
The crossing came after the trough. The fall was faster than the signal, so acting on it gave no protection. That is one named episode. It says nothing about other fast falls.
Our trend model uses this kind of analysis. It makes the choice separately for each asset. The rules in this guide say nothing about how any signal we publish is built.
Appendix: what this test leaves out
Cash earns nothing. A rule that sits out part of the time would have earned something on that cash, so the choice understates every rule. With cash earning a Treasury bill fund's return from 12 January 2007, 11 of 105 tests beat holding on return, against 7 with cash at nothing. The conclusion holds either way.
The risk measure. Where this series reports one, it is called CAGR over annualised volatility. CAGR means compound annual growth rate. It is not a Sharpe ratio, because the top is a compounded return while the bottom is built from daily moves.
Seven funds are not seven independent tests. SPY, QQQ, DIA and IWM are four views of one US equity market. Gold and silver move together. The counts out of 105 are not hit rates.
Costs are simple. The 5 basis points allow no wider spread in a crisis and no tax. The fastest rules in the grid trade so often that real results would be worse than shown.
The funds are seven large survivors picked in 2026. The results illustrate the rule. They do not generalise.
The moving average guide on this site treats cash and costs differently from this guide.
In the evidence here, a death cross marked a trade of lower return for a smaller worst loss.
Learn more with YX Insights
This explainer is part of the YX Insights Academy. Each one takes a single idea and checks it against real data.
The same approach runs through everything else we publish:
Systematic Portfolio: ready-made portfolios for Macro & Megacaps and for Commodities. We publish the holdings and every change.
Multi-model Signals: a daily long-or-flat call on every name we cover. Each call shows how strongly our four models agree.
Research: company deep dives, macro commentary and essays on how we test.
Good places to start on the website:
Academy: more explainers like this one.
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Macro & Megacaps Systematic Portfolio and Commodities: the two portfolios in detail.
Track record: live results since 3 August 2026, plus the ten-year backtest.
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Common questions about the death cross
How accurate is a death cross?
This guide measures what acting on a death cross returned. It does not measure how often prices fall after one. The rule had a shallower worst drawdown than holding on all seven funds, but returned less on six.
Is a death cross good or bad?
The record is mixed. Acting on the 50/200 signal cut the worst drawdown on all seven funds, on SPY from 55.2% to 33.7%. It also returned less than holding on six of the seven.
What happens after a death cross?
This guide tests a rule. Our golden cross guide covers the returns after each cross. The SPY chart shows two outcomes. One death cross came before a long fall. A golden cross reversed the other within months.
What is the opposite of a death cross?
The opposite is the golden cross, when the 50-day moving average rises above the 200-day. In our test, it is the signal to hold the fund again.
Does a death cross work on the S&P 500, the Dow, Tesla or Nvidia?
We tested funds, so single stocks such as Tesla and Nvidia are untested. The rule on SPY, the S&P 500 fund, returned 9.93% a year against 10.84% for holding. On DIA, the Dow fund, it returned 5.16% against 8.85%. Both had a shallower worst drawdown.
DISCLAIMER: This article is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.