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Death cross: Dow forms perilous pattern

A trader works on the floor of the New York Stock Exchange.
Adam Jeffery | CNBC
A trader works on the floor of the New York Stock Exchange.

The Dow Jones industrial average spooked Wall Street on Tuesday by forming a chart pattern that's supposed to signal the end of bull markets ... the so-called death cross.

Investopedia defines the theory as:

A crossover resulting from a security's long-term moving average breaking above its short-term moving average or support level.

The common way to measure this is comparing the 50-day moving average to the 200-day moving average. When the 50-day falls below the 200-day, a "death cross" is formed and a securities long-term trend could be over.

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