GLOBAL STOCK SELLOFF CONTINUES -- BRITISH POUND HITS NEW LOW -- EUROPEAN STOCKS HIT HARD AGAIN -- US STOCK INDEXES BREAK MAY LOW -- DOW AND S&P 500 FALL BELOW 200-DAY LINES -- TELECOM, UTILITIES, AND REITS BENEFIT FROM PLUNGING BOND YIELDS
U.S. STOCK INDEXES BREAK CHART SUPPORT... The global selling of stocks that started on Friday continued into today. Big losses in Europe signaled another bad day. The British Pound fell to another 30-year low (Chart 1). Chart 2 shows London's FTSE 100 losing more than 2% and falling below its 200-day average. The rest of Europe is doing even worse. Chart 3 shows the Dow Jones Europe EX UK Index down more than 4% and threatening its February low. The Euro has fallen to the lowest level in three months. The dollar jumped again which is putting downside pressure on most commodities and stocks tied to them. Gold, however, continues to attract safe haven money. A plunge in the 10-Year Treasury Yield to a four-year low is supporting bonds, as well as dividend paying stocks like telecom, utilities, and REITs. The plunge in bond yields continues to hurt bank stocks which are leading U.S. stocks lower. U.S. stock indexes are breaking support levels.
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Chart 1
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Chart 2
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Chart 3
STOCK INDEXES BREAK MAY LOW... U.S. stock indexes aren't falling as far as in Europe, but are suffering technical damage of their own. Charts 4 and 5 show the Dow Industrials and the S&P 500 falling below their May lows and 200-day averages. The Nasdaq fell below its 200-day line last week and is now trading at the lowest levels in four months. The Nasdaq Composite is also suffering the largest percentage gain of the three. Even bigger losses are being seen in small caps. A big drop in airlines is also weighing heavily on transportation stocks. Trading is heavy for the second day.
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Chart 4
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Chart 5
