The world economy appears to be stalling…

Yesterday, we got news that South Korea’s exports dropped 14.7% since last August…their largest decline since the financial crisis. It’s far worse than the 5.9% drop economists were expecting.

South Korea’s exports are important because they’re considered a “canary in the coalmine” for the global economy. South Korea is a major exporter to the largest economies in the world including China, the US, and Japan. South Korea also releases its export numbers much earlier than other major countries. That’s why a bad reading for South Korean exports is often the first sign that the global economy is in trouble.

The ugly news slammed stocks around the world. Chinese stocks dropped 1.3%…Japanese stocks dropped 3.8%…and the major indexes in Germany, the United Kingdom, France, and Spain all lost at least 2%.

•  These big drops came one day after the worst month for global stocks in over three years…

Regular Casey readers know last month’s selloff hit every major stock market on the planet. China’s Shanghai index lost 12%…Japan’s Nikkei lost 7.4%…and Europe’s STOXX 600 lost 8.5%.

The MSCI All-Country Index, a broad measure of the global stock market, fell 6.8%…its worst month since 2012.

US stocks also fell hard. The S&P 500 lost 6.3% in August. And the Dow Jones Industrial Average fell 6.6%. It was the Dow’s worst month since May 2010, and its worst August in 17 years.

•  Bearish signs are popping up everywhere…

Last month’s crash dropped the S&P 500 below an important long-term trend line.

A long-term trend line shows the general direction the market is heading. Many professional traders use it to separate normal market gyrations from something bigger. Think of it as a “line in the sand.”

The market is constantly going up and down…but as long as we’re above the long-term trend line, the dominant trend is still “up.” But when a selloff knocks the stock market below its long-term trend line, it’s a sign the trend might be changing from up to down.