DRUG STOCKS UNDER PRESSURE -- BONDS AND STOCKS ARE DOWN -- GOLD IS UP
DRUG INDEX IS SLIDING... Drug stocks are coming under some heavy selling pressure today. That's reflected in the AMEX Pharmaceutical Index, which slipped under its 50-day line last week. The DRG appears headed toward its May low and its 200-day line. Disappointing earnings from Merck is part of the reason for the drug selloff. Merck is one of the Dow's weakest stocks today. The big drug stock is breaking short-term support along the lows of the past month and is also threatening its 50-day line. Stocks are also being led lower by the Nasdaq market as profit-taking continues in the techology sector.
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NASDAQ 100 BREAKS INITIAL SUPPORT... The biggest percentage losses are coming in the Nasdaq 100. The daily chart shows the NDX trading under 1250 which marked the highs formed during June. That greatly increases the odds for a further drop toward its 50-day moving average. The daily MACD lines have also turned negative for the first time in a month.
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BOND YIELDS ARE OVER 4%... Part of the selling in stocks might be coming from the fact that the yield on the 10-year T-note is trading above 4%. If it closes there, it will be the first time in more than three months. The daily chart shows the yield is challenging the highs that were formed during April and May.
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GOLD STOCKS ARE BOUNCING... The dollar is weak today, which is boosting the price of gold by $4.00 Bullion is oversold and appears to be finding support at its 200-day moving average. Gold stocks are up over 3.5% today as a result. The Gold Bugs Index is back over its 50-day line. Newmont Mining is bouncing off its 50-day moving average.
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