SINKING SUN AND FALLING DOLLAR WEIGH ON STOCKS -- GOLD AND GOLD STOCKS ARE BOUNCING
SUN LEADS NASDAQ LOWER... Sun Microsystems is the most actively-traded Nasdaq stock this morning. And it's price has plunged. Chart 1 shows the stock gapping down to the lowest level in five months. It's also fallen beneath both moving average lines. The stock is now threatening the chart lows formed from the fourth quarter of last year through the spring around 30. That's caused some nervous selling in the rest of the Nasdaq market. The loss of 14% by SUNW this morning is putting downside pressure on the Nasdaq 100.
Chart 1
NASDAQ 100 IS TESTING 50-DAY LINE... The Nasdaq 100 is down 29 points this morning and is threatening to drop beneath its 50-day moving average. A close beneath that support line would be another sign of weakness. The daily MACD lines are still negative. And, the 14-day RSI line is trading beneath 50. Both are indicative of downside momentum.
Chart 2
EURO AND YEN SURGE AGAINST DOLLAR... The market is also being hurt by a plunging dollar. Charts 3 and 4 show the Euro hitting a 3-month high against the dollar and the yen hitting a 3-year high. That kind of a drop in the dollar makes stock traders nervous. It's helping bonds however. Bond prices are bouncing this morning, as bond yields drop. Falling bond yields are consistent with a weaker dollar. The biggest gainer is gold. Gold bullion is up $3.40 this morning and gold stocks are up 2%.
Chart 3
Chart 4
Chart 5
