Another death cross forms, and it's a doozy

A Chinese day trader watches a stock ticker at a local brokerage house in Beijing, China.
Getty Images

Don't get too excited about the recent recovery in stocks. The formation of so-called death crosses in major indexes suggests the trend is still lower.

The Shanghai composite, the epicenter of the plunge in global markets over the last month, flashed a death cross Wednesday when its shorter-term moving average fell below its longer-term moving average. The index joins the S&P 500, the Hang Seng and the German DAX as key global averages that formed a death cross in the last month.

A bearish technical indicator, a death cross occurs when a security's 50-day moving average falls below its declining 200-day moving average.