GLOBAL STOCKS WEAKEN -- THE DOW AND S&P 500 REACH LOWEST LEVELS SINCE NOVEMBER -- GOLD AND THE DOLLAR JUMP SHARPLY AS FOREIGN CURRENCIES TUMBLE -- BONDS RISE AS STOCKS FALL

STOCKS FALL SHARPLY... Stocks are falling sharply all over the world. Most foreign markets fell on Monday when our markets were closed and continued their fall today. Our market is just following along. On Friday, I showed a point & figure chart of the S&P 500 on a short-term sell signal. The red box in Chart 1 shows the S&P registering another sell signal today by falling to the lowest level in three months. Chart 2 shows its bar chart version with the S&P falling below 800 for the first time since November. Chart 3 shows the Dow also heading toward its November lows. The Nasdaq had held up a bit better than the other two indexes. Chart 4, however, shows the Nasdaq Composite gapping down -3.5% this morning and falling decisively below its 50-day moving average. All stock sectors are in the red with financials leading the decline. The two sectors with the smallest losses are defensive groups like healthcare and consumer staples.

Chart 1

Chart 2

Chart 3

Chart 4

BONDS, DOLLAR, AND GOLD RISE... Gold is the big winner of the day. The two green p&f boxes in Chart 5 (with a 1% box size) show the streetTracks Gold Trust (GLD) continuing its uptrend. That chart has been on a p&f buy signal since the $855 level. The bar version in Chart 6 shows the GLD jumping the equivalent of $32 and and heading toward the highs of July and March. It broke a yearlong resistance line last week. If you've been reading our bullish messages on gold, this shouldn't come as a surprise. With most foreign currencies falling, the U.S. Dollar is jumping to the highest level in three months (Chart 7). Although the dollar and gold are rising together, bullion is rising faster. Treasury bond prices are also jumping today as traders move out of stocks.

Chart 5

Chart 6

Chart 7