FINANCIALS LEAD MARKET LOWER -- CISCO WEIGHS ON NASDAQ -- FEDEX PULLS TRANSPORTS LOWER
FANNIE MAE FALLS THE HARDEST... It's not hard to see where most of the damage is being felt today. The biggest sector loser so far today is the financial group. The two biggest percentage losers in the S&P 500 are also financial stocks -- Fannie Mae and Morgan Stanley Dean Witter. Chart 1 shows FNM plunging below its moving average lines and a support line drawn under its June/August. Today's big volume bar reveals heavy trading as well. That's a bearish combination. Morgan Stanley fell under its 50-day average in early trading -- also on heavy trading -- but is trying to recover some of that lost ground. Just yesterday I showed strong chart action in a couple of brokerage stocks -- Goldman Sachs and Lehman Brothers and the Broker/Dealer Index challening its 200-day average. The XBD is backing off from that resistance line today (Chart 3).
Chart 1
Chart 2
Chart 3
S&P 500 SLIPPING UNDER 200-DAY AVERAGE... With all sectors in the red today, the S&P 500 SPDR is in danger of slipping beneath its 200-day moving average. While that doesn't change the long-term chart picture, a close beneath the line would confirm the presence of at least a short-term top. The biggest index loser today is the Nasdaq market. Selling in Cisco is one of the biggest reasons. Unfortunately, selling in the Nasdaq 100 Shares is happening right at its 200-day moving average. Because of its size, Cisco carries a lot of weight in the QQQ. The last chart shows CSCO helping to lead the QQQ lower. It's also today's most heavily traded stock.
Chart 4
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Chart 6
FEDEX HURTS TRANSPORTS... A big drop in Fedex is pulling the transports lower today. The daily chart shows the stock falling today on heavy volume. Notice that its daily RSI line is falling from overbought territory over 70. That's a sign of at least a short-term top. The first potential line of support is the (green) 20-day average. If that doesn't hold, FDX call drop toward its (blue) 50-day line.
Chart 7
