This week, at first glance, it seems that we experienced a typical pullback in the stock market uptrend like other times since March. However, I think this latest pullback was different.

The first thing that I noticed was the enormous selling volume within the Dow Transports. What’s the big deal? It was higher selling volume than at any other time in the last year. Even when things were still sliding off the map.

Technicians will tell you that the Dow Transports should move up with the Dow Jones Industrial Averages in order to confirm an uptrend. The inverse is also true. When the transports start to tank, it won’t be long before the industrials likely fizzle out, too.

The transportation of goods tells you a lot about the health of an economy. In a vibrant economy, transportation companies are shipping stuff all over the place as business is expanding. It’s why the transportation sector is at the earlier end of an economic expansion cycle.

You have to first get goods to your store before you can sell those goods. So, if retailers think that demand is going to pick up, they’ll first order more goods ahead of time in order to meet that demand when it comes.

This is why you’ll see a pick up in transportation stocks even sooner than you will in many sectors of the economy because it benefits earlier on in the cycle.

However, if the transports start to fall on their face, what does that tell you about the economy? It either tells you that things have gotten ahead of themselves and we’ll have a good size pullback in these stocks or that the recovery process is dying out since the government stimulus isn’t turning into consumer spending.

You’ll remember that last week I told you that my banker told me that 40 out of 41 loans that crossed his desk this year got rejected. Well this is one of the biggest banks in the world and he said that he believes it is representative of what’s going on all over the place still.

So, even if consumers wanted to spend again on big-ticket items, they couldn’t if they can’t get their hands on the financing that they need.

After all, you know that most Americans don’t save like they should, so they have to resort to turning to the bankers. If the bankers are tight-fisted, then you’re not spending even if you wanted to. If the consumer’s not spending, then the recovery will stall.

Now, remember, I said that my first clue this week was the huge selling volume in the transports. Last week, my big clue was the lack of credit being extended to potential buyers.

This last week I also saw oil continue to break down on the charts as it pierced through the bottom of an ascending triangle pattern. When that happens, it’s a bearish sign for the economy. It means there’s not enough demand placed upon the supplies of the world due to a lack of economic expansion.

The fall of oil coupled with the fall of the transports and the lack of credit all build a case for the economy falling on its face again.

Now here was my final clue from last week.

Several trend changes happened in some key currency pairs on Thursday and Friday of last week. One of these was USD/CAD. It broke its downtrend and headed higher. That’s because falling oil prices work against Canada’s oil exports but they work in favor of the dollar, since oil is priced in dollars.

This Canadian dollar break was across the board, as EUR/CAD, CAD/JPY, all followed on CAD weakness.

Therefore, I expect the carry trades to have at least a huge pullback along with stocks in the near term and possibly an entire trend reversal back into a downtrend as tight-fisted credit continues to choke off the consumer and therefore the economy right along with it.