TECHS LEAD MARKET LOWER -- BONDS RALLY -- DOLLAR DROPS -- GOLD BOUNCES

QQQS SLIP UNDER 50-DAY LINE ON VOLUME... Nasdaq 100 Shares (QQQ) led the market lower again today, reflecting continuing weakness in the technology sector. Chart 1 shows the QQQ closing beneath its 50-day average for the first time in seven weeks. Volume picked up again today as prices fell. Notice that the red volume bars (down days) have been much bigger than the green bars (up days) over the past week. That's a negative pattern. The indicator plotted under Chart 1 shows that the red -DI (selling power) line has crossed over the green +DI (buying power) line for the first time in six weeks. The ADX (black) line has also started to drop which usually signals that a short-term top is in place. The most active stocks on the Nasdaq were Sun Microsystems, Cisco, Intel, Microsoft, and Oracle. SUNW lost over 14%. The other four big techs lost over 3%. Chart 2 shows the S&P 500 SPDRs (SPY) falling on very heavy volume. The SPY broke its 50-day line last week. Today's downturn pushed the major averages into the red for September. An early plunge in the U.S. dollar and a big drop in September consumer confidence hurt stocks. However, it gave a big boost to T-bonds and notes, both of which jumped over a point. Late Japanese intervention pushed the yen down against the dollar; the greenback, however, still lost ground against most other currencies. Gold jumped $2.90. Gold and energy stocks gained.

Chart 1

Chart 2