GLOBAL MARKETS DROP ON DUBAI CONCERNS -- STOCKS AND COMMODITIES DROP WHILE THE DOLLAR AND BONDS RALLY -- SO FAR, NO SERIOUS CHART DAMAGE HAS BEEN DONE -- BUT A MORE CAUTIOUS TONE IS WARRANTED

ATTEMPT TO DELAY DEBT PAYMENTS RATTLES MARKETS... An attempt by Dubai to delay debt payments for six months has rattled world markets. Most global stock markets fell on Thursday while the U.S. market was closed for the Thanksgiving holiday. That's why U.S. stock markets are dropping today. Other markets are reacting as would be expected. Commodities are weakening along with stocks, while the U.S. Dollar and Treasury bonds are rising. Emerging markets are also suffering losses. Bear in mind that the U.S. stock market has reached major overhead resistance (over 1100 in the S&P 500) after having retraced 50% of its bear market decline. In addition, short-term negative divergences have been pointed out in financial stocks and small caps. Recent rotations have also seen money flowing into defensive consumer staples, healthcare, and telecom. All of which have suggested a more cautious tone in the markets. It's also possible that money managers are looking to protect yearend profits. Today's chart action is pictured in the charts shown below. s you can see, no serious chart damage has been done and no trend reversals have taken place. Thin trading conditions may also exaggerate the price moves. I'm inclined to let things settle down a bit before drawing any major conclusions from one day's action. However, my recent comments have pointed out a more defensive tone in the stock market. Considering how far the stock market has rallied since March, that's probably not too surprising. I'd suggest keeping a close eye on the charts to see if any more serious selling develops.

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