With markets at all-time highs, thanks to an unprecedented AI boom, it might be tempting to jump in and take your chances.
But this rising tide is not lifting all boats. Some big-name stocks, even some AI-related ones, haven’t participated in this summer’s rally. Others have soared but are running out of steam.
A good way to tell whether a stock is about to turn downwards is the “Death Cross” indicator.
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We touched on Golden Crosses recently, but today we'll turn our focus to its evil cousin – the Death Cross, which occurs when a stock's 50-day moving average crosses below its 200-day moving average. This indicates slowing momentum and is considered one of the most reliable bearish signals in the market technician's toolkit.
A Death Cross alone isn't a reason to suspect a stock is about to fall off a cliff, and investors still need to confirm signals with multiple indicators to gauge the strength of the trend. However, a Death Cross is a reliable signal when searching for reversals or continuations. Today we'll examine five stocks that recently had a Death Cross form on their daily charts.
We aren't looking at Death Crosses alone – each of the stocks on this list has additional technical or fundamental headwinds working against them.
Charter Communications Inc.
Charter Communications (NASDAQ:CHTR) is a conglomerate that formed in 2016 during the merger of Time Warner Cable, Bright House Networks, and Legacy Charter. While the initial agreement was met with acclaim from investors and analysts alike, it has been anything but smooth sailing for the stock. CHTR shares have declined by over 55% in the last five years, and the bad news continues to mount for the cable giant.
Charter reported Q2 earnings on July 25 and missed badly on EPS, reporting $9.18 per share versus the estimated $9.78. Revenue slightly surpassed expectations, but grew at only a 0.6% clip year-over-year (YOY). CHTR shares dropped by more than 18% following the report and have continued to decline in the weeks that followed. The stock stabilized recently, but last week's Death Cross could signal that further declines are ahead. CHTR's Benzinga Edge scores also leave a lot to be desired, including a dreadful 12.95 Momentum rating.
Paychex Inc.
Paychex (NASDAQ:PAYX) provides a range of payroll and human resource services to small and mid-size businesses. Unfortunately, this has become an area of concern as small and mid-size companies are more heavily affected by tariffs, and Paychex could suffer further declines if the job market continues to deteriorate. Additionally, the stock is beset by technical signals indicating a strengthening downtrend.
PAYX shares have risen approximately 10% over the last 12 months; however, the stock currently faces some technical headwinds. The price has pierced the 50-day and 200-day simple moving averages to the downside, and a Death Cross has now formed to confirm the downtrend. Its Benzinga Edge rankings have also cratered, including a 17.50 Value score and a 30.68 Growth score. The Relative Strength Index (RSI) is also above the Oversold threshold of 30, which indicates that this drawdown isn't finished quite yet.
ServiceNow Inc.
ServiceNow (NYSE:NOW) is a software provider with a healthy list of AI clients, but despite the massive tailwinds in the AI sector, NOW shares haven't participated in the rally. The stock is down more than 18% year-to-date (YTD), with 9% of that decline coming in the last month alone. ServiceNow has one of the lowest Benzinga Edge Value scores we're tracking at 10.55, thanks in large part to its 107 Price-to-Earnings (P/E) ratio. However, valuation is not the only concern for NOW investors – the stock is also flashing some technical alarms.
NOW shares have posted two Death Crosses this year, with the most recent one being more concerning, as tariff fears in the tech sector have largely subsided. An Oversold reading on the RSI has delayed the downturn over the last few trading sessions, but now that a second Death Cross has formed, the weight of its valuation could be too much despite impressive earnings figures.
Roper Technologies Inc.
If you check out Roper Technologies' (NASDAQ:ROP) Benzinga Edge scores, you might need sunglasses to block out all the red: 17.55 in Value, 19.24 in Quality, 28.89 in Momentum, and 29.43 in Growth. The stock's decline has also intensified in recent weeks, and now trades below its 50-day and 200-day SMAs. Despite strong Q2 earnings, Roper now expects significant margin declines in the second half of 2025, and investors have started to take notice.
ROP shares saw a Death Cross form earlier this month amid a nearly 10% drop. A brief rebound occurred last week as the RSI triggered an Oversold signal, but the share price is now firmly below the 200-day SMA, which had previously been an area of support. Roper was a big winner during the AI early innings in 2023 and 2024, but the stock's uptrend has been halted and more downside action could be on the horizon.
Costco Wholesale Corp.
Wait, Costco (NASDAQ:COST) on a list of death cross stocks? Say it ain't so! However, unfortunately, the rally in COST shares has begun to falter due to the stock's pricey valuation and sky-high expectations. The company reported its Q3 numbers for fiscal 2025 in May, once again surpassing analysts' expectations on both EPS and revenue. Comparable sales grew nearly 6%, a staggering number during a time of heightened uncertainty. But COST now trades at 55 times earnings, and investors might be getting less willing to pay a premium for a company with Costco's margins.
After comfortably trading above its 50-day and 200-day SMAs for most of 2024, the uptrend started cracking in Q1 2025 amid tariff worries and valuation concerns. The stock has essentially traded sideways since the election, and now technical signals are indicating a potential further breakdown. The Death Cross formed earlier at a crucial point as the price fights for strength along the 200-day SMA. If the stock fails to rally from here, the RSI shows that the decline could be lengthy before Oversold levels are reached.
Editorial content from our expert contributors is intended to be information for the general public and not individualized investment advice. Editors/contributors are presenting their individual opinions and strategies, which are neither expressly nor impliedly approved or endorsed by Benzinga.
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