Three Major “Death Crosses” Just Triggered… Is This 2008 All Over Again?

We’ve got a little bit of “March Madness” taking place off the hardwood today. The Russell 2000 just flashed a “death cross”, the scary chart pattern where the 50-day moving average drops below the 200-day. Historically, this has meant short-term pain but long-term gains. 

Now, technical analysis can sometimes feel like financial astrology (your buddy who swears by it just got a margin call), but this isn’t just some random blip. This is the first time in 17 months the Russell 2000 has hit this bearish crossover. The last time was October 13, 2023. And what happened next was pretty rough. The index dropped another 5.6% before finding a bottom at a three-year low. If history repeats, small caps could still have more room to fall before a rebound.

And it’s not just small caps feeling the heat. Nvidia just saw its first death cross since April 2022… and back then, the stock kept dropping for six months, losing 47.7% before finally bottoming. Oh and out of peer pressure, the Dow Jones Transportation Average also flashed a death cross… a rare event that’s only happened 28 times since the 1800s.

Why does this matter? Dow Transports are a leading indicator of economic health, and according to Dow Theory, if Transports are falling, Industrials should follow. Over the last month, Transports have already tanked 10%, and while the Dow Industrials are up 3% this past week, they’re still down 4.6% on the month. That suggests the recent rally might not have legs.

As far as the major indexes go… they wet the bed, but it could’ve been worse. The S&P 500 fell 0.2%, the Nasdaq lost 0.3%, and the Dow did... basically nothing (what’s new?). Investors are still hung up on the Fed’s latest meeting, where Jerome Powell reassured everyone that rates aren’t changing… yet somehow, people still found a way to panic. The central bank is sticking with its forecast of two rate cuts in 2025, but Powell also pointed to tariffs as a scapegoat (he’s already trying to shift the blame if things go sideways).

Over in single-stock land, Apple and Tesla led the charge… downward, that both dropping 1%. Apple is reportedly burning $1 billion a year on Apple TV+, a streaming service that most people forget exists (unless you're a die-hard Ted Lasso or Severance fan). I guess Tim Cook’s solution is to cut content spending from $5 billion to just $500 million (that’ll fix it).

Speaking of Tesla, the EV’s on track for its worst losing streak in history (again). But this might actually be some good news. Retail traders, undeterred, have shoveled in $7.3 billion over the last 12 sessions (if you listen closely, you can hear a bunch of “buy the dip” warcry’s coming from basement windows). Short sellers, on the other hand, are reportedly making out like bandits, banking $15 billion betting against Tesla and Nvidia this year. Tesla alone has gifted them $10 billion in profits, thanks to the disastrous stock slide.

If you’re looking for a sector that isn’t getting spanked, Wall Street is all-in on energy stocks. 65% of analysts have buy ratings on the sector. Maybe they know something we don’t, or maybe they just like oil when it looks like we’re going to be in a bear market for a while… either way, make of that what you will.

If you read all of this, congrats for having a 10 second attention span (better than me). As always, here’s our heatmap for today.