Death cross — just from the name of it, the framework sounds utterly unappetizing. When a sector stalwart like Sherwin Williams (NYSE:SHW) incurs such a pattern, the natural instinct is to run. After all, what took years to build up can sometimes evaporate in a matter of days. That’s why true success in the market involves knowing when to buy and sell.

Subsequently, for those who have already been profitable on SHW stock, now may seem to be an ideal time to exit. With tariffs flying and gold soaring, the current environment isn’t conducive for unnecessary risk exposure. Plus, even if the economy escapes an outright recession, the consensus opinion appears to be that circumstances could worsen before they improve.

Adding tension to the matter, Money Morning’s Chris Johnson warned readers that tech juggernaut Nvidia (NASDAQ:NVDA) also recently charted the death cross. A circumstance where the 50-day moving average slips below the 200 DMA, the death cross symbolizes an erosion of upside momentum. In some cases, this pattern marks the beginning of a downturn or possibly even a bear market.

In my opinion, the death cross is similar to a skin condition. Perhaps in most cases, the condition reflects the consequences of an everyday irritant. But in other cases, it could be a symptom of something much more serious. The point is, you should listen to your body and if there are concerns, seek the guidance of healthcare professionals.

Similarly, a death cross flashing isn’t automatically a harbinger of doom. Instead, it’s a chance to get under the hood for a proper diagnosis.

SHW Stock is Practically Screaming for Speculation
In all fairness, SHW stock is on the cusp of printing the death cross: one more soft session could do the trick. If and when this pattern materializes, though, investors will want to consider buying — not selling — the security.

Over the trailing decade, there have been seven instances of the death cross flashing. In most cases, following certain time intervals, SHW stock has been able to recover, presenting a compelling opportunity for daring and astute speculators.

From August 2015 to February 2023, over 57% of death crosses resulted in a positive outcome one month later. And under the positive scenario, the average return landed at a healthy 5.93%. What’s even more intriguing, over a three-month period, all death crosses have resulted in upside, with an average return of 10.53%.

Using this market intelligence, bold investors could potentially buy the $380 SHW call expiring June 20 of this year. To be sure, because of the seeming unlikelihood of SHW stock reaching $380 in three months’ time, the aforementioned call option is relatively cheap. However, history shows that investors consistently buy the weakness in Sherwin Williams.

Of course, it goes without saying that there are no guarantees in the market. While SHW stock may have a perfect death cross record, it’s not guaranteed to stay spotless. Still, if you’re looking for a contrarian wager with a surprisingly elevated prospect for success, Sherwin Williams should be on your radar.

— Joshua Enomoto

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Source: Money Morning