The U.S. dollar index recently triggered a critical technical buy signal, potentially heralding upside for U.S. stocks and crude oil.

Bank of America Merrill Lynch's technical strategy team noted that on December 19, the dollar index (DXY) formed its 39th golden cross—a pattern historically associated with dollar strength. Data shows the index has risen 68-79% of the time within 20-60 trading days post-signal, averaging 1.22% gains.

Notably, this golden cross is exceptionally rare—marking only the 16th occurrence since 1970 where the 200-day moving average (MA) was declining. In such cases, the dollar has rallied 80% of the time.

The signal carries implications for other assets: - The S&P 500 initially shows mixed performance but typically strengthens after 35 trading days. - Crude oil has risen 100% of the time within 35 trading days post-signal. - Gold and 10-year Treasury yields remain neutral, with ~50% upside probability.

**39th Golden Cross: 79% Upside Probability** On December 19, the DXY closed at 98.60 as its 50-day MA crossed above the 200-day MA. Historically: - 79% of golden crosses led to gains after 35-60 trading days. - Median returns reached 1.40%.

This suggests dollar strength could override typical year-end softness early in 2026.

**Rarity: Golden Cross Amid Declining MAs** This marks the 16th instance where the golden cross occurred with a falling 200-day MA—a scenario yielding 80% upside odds across 15-60 trading days. The last such event in 2004 preceded six months of choppy trading before Q4 declines during Fed rate hikes.

Bank of America notes the DXY is testing long-term trendline support at 97. A breakdown could trigger a drop toward 90/87.

**Crude’s Perfect Record & Stocks’ Delayed Rally** - S&P 500 gains momentum after 35 days, with 87% upside probability after 60-80 days when the 200-day MA falls. - Crude averages 9.07% returns post-signal, surging 100% of the time (12/12 cases) when the 200-day MA declines. - Gold and Treasuries show no clear trend, suggesting divergence among traditional havens amid dollar strength.