BANKS, BROKERS, AND BIOTECHS LEAD MARKET LOWER -- WEAKER DOLLAR IS BOOSTING GOLD

BANKS AND BROKERS ARE FALLING... Our Friday evening update showed healthcare and financials pulling the market lower. That trend is continuing in Monday trading. The bank and brokerage indexes have fallen under their 50-day averages. The Bank Index, which is the weaker of the two, is threatening its early July low. Two of the day's weakest -- and most actively-traded bank stocks -- are Citigroup and JP Morgan.

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CITIGROUP AND JP MORGAN FALLING ON HEAVY VOLUME... These two big banks are among the most actively-traded NYSE stocks today. That means that they're falling on volume, which isn't a good sign. Citigroup is threatening its early July low. JP Morgan has already broken that support level. Notice the big volume bars on Friday as both stocks sold off. One reason the fall in financial shares is disturbing is because they're viewed as leading indicators of the rest of the market. They led the market higher -- and are now leading it lower. A big reason for their recent slide has been the big backup in interest rates. Fianncial stocks are especially interest-rate sensitive.

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BIOTECH INDEX IS BREAKING 50-DAY AVERAGE... Biotechs are also having a rough day. The Biotech Index is breaking its 50-day line for the first time since April. Two of the biggest reasons are Genzyme and Medimmune. Both biotech stocks are among the biggest losers in the Nasdaq market.

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S&P 500 NEARING TEST OF JULY LOW... After breaking its 50-day average on Friday, the S&P 500 has slipped under chart support at 975. It's now bearing down on its early July 2 intra-low at 962. All the other major averages are trending lower as well. The Nasdaq 100 is moving down to test chart support along its July low and its 50-day moving average. Any closing violation of those levels would confirm a short-term Nasdaq top.

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EURO BOUNCE IS HELPING GOLD... As we suggested on Friday, stock market weakness is starting to pull the dollar lower. As a result, the Euro is continuing to bounce of its July low. That's giving a boost to gold and gold shares today.

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