Investment Line: Hide! The market is facing a double death cross

Now is the time to run for the hills if you believe charts are good predictors of equity markets.

This is because a number of different indicators are forming what the chartists call 'death crosses'; sell signs when two indicators cross in a pattern that spells doom.

The first of these indicators currently in this pattern is the average price of the FTSE 100. When the 50-day moving average falls below the 200-day average bad things tend to happen. Well at least they did in December 2007 just before 'the troubles' started. Of course the sceptics among us may point out that in December 2007 there were, well...some other things happening.

The other indicator now in a 'death cross' is the price of copper and the FTSE 100. Copper has long been used even by chart-sceptics as a good measure of economic progress. Perhaps its new-found correlation to Chinese demand and the rather extraordinary events connected to the Chinese currency in recent days would lead some to question its relationship to the FTSE 100 but hey ho if the chart says run...run.

Michael Hewson, an analyst at CMC Markets, explains the situation: 'As risk appetite diminishes, equity markets fall back, as does copper and as risk appetite increases so copper rises. This has been especially true in the last 12 months. The close correlation between these two markets is quite striking, but not altogether surprising given how heavy in resources, and particularly mining stocks the FTSE100 is.

'The FTSE 100 is in the process of posting a 'death cross' which is where the 50 day crosses below the 200 day moving average. Furthermore, earlier this week the 200 day average successfully re-buffed an attempt by the FTSE100 to break above it.

'There is trend line support through 5,100 from the recent lows to around 4,800, and a break of this level could well increase the bearish pressure building up on the downside.

'If we also look at the copper chart (below) over the same period we can see there is a sharp similarity between the two charts, with the same 'death cross' forming and the same short term support line.