Golden Cross
A golden cross is a chart pattern in which a shorter-term moving average, usually the 50-day, crosses above a longer-term one, usually the 200-day.
The golden cross is read as a sign that short-term prices have strengthened enough to lift the trend above its long-term average, which many traders interpret as the potential start of a sustained uptrend. Some look for rising volume as confirmation.
Its counterpart is the death cross, when the 50-day moving average falls below the 200-day moving average, interpreted as a bearish sign. Both events often get attention in financial news when they occur in major indexes such as the S&P 500.
Because both moving averages are based on past prices, a golden cross is a lagging signal. By the time it appears, a substantial part of the rally may already have happened. In sideways markets, the averages can cross back and forth repeatedly, producing false signals.
Example: after a decline, a stock's price recovers and its 50-day SMA rises from $90 to $101 while the 200-day SMA sits near $100. The day the 50-day line moves above the 200-day line marks the golden cross. Historical studies on its usefulness show mixed results.