MARKET RESUMES SELLING -- RETAILERS GET MARKED DOWN -- DOLLAR BOUNCE KEEPS PRESSURE ON COMMODITIES -- GOLD TUMBLES AS EURO BREAKS SUPPORT -- TREASURIES CONTINUE TO RALLY
RETAILERS GET DISCOUNTED... Selling has resumed in stocks this morning. The biggest percentage losses are appearing in consumer discretionary stocks, and retailers in particular. Chart 1 shows the Consumer Discretionary SPDR (XLY) falling below its 50-day line for the first time this year. That had been one of the market's strongest sectors. Most of the XLY selling is coming from retailers. Chart 2 shows the S&P Retail SPDR (XRT) bearing down on its April lows after failing a test of its April high. A close below the April low would complete a "double top" reversal.
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Chart 1
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Chart 2
NASDAQ AND S&P 500 BREAK APRIL LOW... Charts 3 and 4 show the Nasdaq Composite and S&P 500 index falling below their April lows. A close below those levels would confirm that the market has entered into a downside correction. The Dow Industrials have fallen below their 50-day line (Chart 5). The next test of potential support for the Dow will take place at its April low. Commodities (andrelated stocks) remain under pressure because of a bouncing dollar.
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Chart 3
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Chart 4
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Chart 5
RISING DOLLAR HURTS GOLD AND OTHER COMMODITIES... Commodities continue to fall. Chart 6 shows the DB Commodities Tracking Fund (DBC) falling below its October/December trendline to a new four-month low. Chart 7 shows the Gold SPDR (GLD) tumblng 2% to a a four-month low as well. A large reason for commodity weakness is a stronger dollar. Chart 8 shows the Power Shares Dollar Bullish Fund (UUP) gaining some upside momentum. Chart 9 shows the Euro slipping to a four-month low. That's probably a delayed reaction to yesterday's elections in Europe. And a vote of confidence in those elections.
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Chart 6
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Chart 7
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Chart 8
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Chart 9
BONDS CONTINUE TO RALLY... Money moving out of bonds and commodities continues to move into bonds, and Treasuries in particular. Chart 10 shows the Barclays 20+Year Treasury Bond iShares (TLT) rising to the highest level in three months. As usually happens when global markets start to sink, money is flowing into the U.S. dollar and U.S. Treasuries.
