SPAIN AND ITALY LEAD EUROPEAN AND GLOBAL STOCKS LOWER -- EURO TUMBLE PUSHES US DOLLAR SHARPLY HIGHER -- MOST COMMODITIES DROP -- GOLD AND TREASURIES RALLY ON SAFE HAVEN STATUS -- S&P 500 NEARS TEST OF 50-DAY LINE
ITALY AND SPAIN PULL EUROPE LOWER... Heavy selling in Europe is pulling down global stock markets around the world. Two of the biggest losers in Europe are Italy and Spain. Both markets are down 6% and 4% respectively. And both are suffering chart damage. Chart 1 shows Italy iShares (EWI) falling to the lowest level in more than six months in heavy trading. Chart 2 shows Spain iShares (EWP) falling to a four-month low. Not surprisingly, European stocks are the biggest losers. Chart 3 shows Europe 350 iShares (IEV) falling more than 3% and threatening its 200-day moving average. It's pretty tough for other global stocks to withstand that type of weakness.
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Chart 1
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Chart 2
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Chart 3
COLLAPSE IN EURO PUSHES DOLLAR SHARPLY HIGHER... The Euro is also coming under heavy selling. Chart 4 shows the Euro gapping 1.7% lower and in position to threaten its May low and its 200-day moving average. Euro selling is pushing the U.S. Dollar Index (UUP) 1.3% higher. Chart 5 shows the UUP pressing right up against its June intra-day high at 21.68. Dollar strength (and Euro weakness) is also pushing commodity markets (and stocks tied to them lower). The only exception is gold which is acting as a safe haven. So are Treasury bonds which are jumping sharply.
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Chart 4
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Chart 5
US STOCK INDEXES SELLOFF... U.S. stocks are following foreign stocks lower. Chart 6 shows the Nasdaq Composite backing off from its May high. Chart 7 shows the S&P 500 selling off 1.6% and breaking initial chart support at 1330 and bearing down its its 50-day moving average.
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Chart 6
