U.S. Stock Market - Sell On April 1st and Go Away?

If we just look at the Dow Jones Industrial Average, today was barely a blip on anyone’s radar screen as this closely watched market barometer lost just 5.69 points (-0.04%) from last Thursday's record closing high. However, the Dow Jones Transportation Average fell sharply today (-1.49%) along with the Russell 2000 Index (-1.34%) and the NASDAQ Composite Index (-0.87%). After a slightly higher opening this morning, most U.S. stocks saw fairly significant selling pressure immediately after the release of the latest Institute of Supply Management’s (ISM) monthly manufacturing survey, which was apparently a disappointment to many and suggested only modest economic growth in this key sector of the economy.

In yesterday’s Sunday New York Times, David Stockman, ex-budget director for President Ronald Reagan, commented in an Op/Ed piece that a stock market crash is just a few years away. While there are always dozens of gloom and doom prognosticators at any point in time, David Stockman’s analysis of the current economic environment (lots of money printing from the Federal Reserve) may have a little more credibility to some. Stockman prophesized an end game to the ongoing U.S. and global central bank monetary expansion that is less than friendly (to say the least) for both Main Street and Wall Street. Stockman’s forecast may have been unsettling to a few equity investors especially coming so close in time to the record high in the S&P 500 Index just posted this past Thursday, March 28^th.

Here are today’s closing marks, with changes from Thursday’s close:

                                                                                    Monday’s Closing Prices                   

Dow Jones Industrial Average                       14,572.85        -    5.68            -0.04%

S&P 500 Index                                                 1,562.17        -    7.02            -0.45%

NASDAQ Composite Index                              3,239.17        -  28.35            -0.87%

Russell 2000 Index                                              938.79        -  12.75            -1.34%

Dow Jones Transportation Average                 6,162.30        -  93.03            -1.49%

Bottom Line: In my computer trading system, a daily chart sell signal was triggered today in the iShares Dow Jones Transportation Average Index Fund ETF (symbol IYT). Transportation stocks have been market leaders since this latest up leg began in mid-November 2012. The Dow Jones Transportation Average soared 31% from its low on November 16^th, 2012 to its recent high on March 18^th. Daily chart sell signals were also triggered today in CSX Corp (CSX) and United Parcel Services (UPS), among other key bellwether issues. Is today’s decline the beginning of the long awaited stock market correction? I believe the answer is YES !

S&P 500 Index Daily Bar Chart with Computer-generated Buy & Sell Signals