FINANCIALS LEAD STOCKS LOWER AS 50-DAY AVERAGES ARE BEING BROKEN -- TREASURY BONDS, THE DOLLAR, AND GOLD ARE BOUNCING -- MOST OTHER COMMODITIES ARE DOWN

SUPPORT LEVELS ON HOURLY CHARTS... Global stocks are having a bad day. The S&P 500 is down -3.5% and is trading below its 50-day moving average. A close below that line would be a setback for the March rally . The Dow and the NYSE Composite Index are doing the same. Only the Nasdaq remains above that support line. On Friday, I suggested that a setback in the S&P 500 could send it down to the prior week's reaction low at 766 which also happened to be 38% retracement of the March advance (see hourly bars in Chart 1). A close below last week's low at 791 could make that happen. A Dow close below initial support at 7550 would signal a further drop to 7258 (Chart 2). The hourly bars in Chart 3 show the Nasdaq Composite threatening intial support at 1488. A close below that level would signal a drop to 1448.

Chart 1

Chart 2

Chart 3

SAFE HAVENS GAIN GROUND... With stocks on the defensive, some money is flowing back into traditional safe havens like Treasury bonds, gold, and the U.S. Dollar. GLD is trying to hold its 50-day line (Chart 5) while the UUP bounced off its 200-day line last week (Chart 6). Friday's sharp drop in the Euro versus the dollar may be one of the catalysts in today's stock selloff because it implies that the European situation is getting worse (plus profit-taking in financial stocks). Outside of gold, most other commodities are in the red today (Chart 7). That's mainly because of the bouncing dollar. It's too soon to draw major conclusions from today's trend reversals. But it's certainly a short-term setback for the stock market. We'll know a little more when we see where the markets close and the level of trading activity.

Chart 4

Chart 5

Chart 6

Chart 7