Transports on the Verge of a Death Cross

Although key global markets were closed on Monday, currency and some bond markets in Europe were open and fell because of doubts over whether Greece would be able to make its June debt payment to the International Monetary Fund (IMF). Adding to investors’ worries were Federal Reserve Chair Janet Yellen’s comments supporting an interest rate increase this year and the local and regional elections in Spain.

Although volume was extremely low, the Stoxx Europe 600 fell 0.6%, France’s CAC 40 was off 0.5%, and Italy’s FTSE MIB fell 2.1%. The euro fell 0.4% versus the U.S. dollar, closing at $1.10.

Brent crude oil rose 1.2% to $66.15 a barrel. Spot gold was up 0.2% to $1,206.80 an ounce. Other markets in the U.S. and the U.K. were closed.

Before getting to today’s chart, I want to thank Serge Berger for his outstanding market comments and analysis while I was on vacation. I read all of his Daily Market Outlooks when I came home from Europe and found that even though we may use slightly different technical tools, his well-reasoned analysis was, as always, spot on.

Dow Jones Transportation Average
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Chart Key

Like Serge, I am still concerned with the lack of follow-through by the Dow Jones Transportation Average. While our economy is slowly improving, the transports failed to confirm the recent high made by the Dow Jones Industrial Average and are now in danger of flashing a death cross — 50-day moving average crosses down through the 200-day moving average.


While a death cross alone is not a trend killer, coupled with the failure to confirm the industrials’ new high, along with a clear lack of momentum indicated by low volume, the market is in danger of a short-term thrust lower.

I’ll have more to say on this and other technical indicators this week. For now, cash is king and the market is telling us to heed these warnings until momentum favors a more bullish trading approach.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.

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