STOCK SELLING INTENSIFIES -- DOW TRADES BELOW ITS 200-DAY AVERAGE -- NASDAQ AND S&P 500 ARE DROPPING TOWARD THEIR 200-DAY LINES -- IF THEY DON'T HOLD, A TEST OF THEIR MARCH LOWS WOULD BE NEXT

TRADE TENSIONS CONTINUE TO WEIGH ON STOCKS... Stocks are under heavy selling pressure today. Energy stocks are leading the market lower with a drop of more than -3%, while oil is dropping nearly twice as much. Technology, industrials, and financials are down -2% or more. As has been the case this month, trade sensitive stock groups are leading the day's decline. Communication and material stocks are also being sold. The only gainers are utilities and REITs. They're getting a lift from a drop in the 10-Year Treasury yield to the lowest level in eighteen months (and safe haven buying). Falling bond yields, however, are hurting financials stocks, and banks in particular. The sharp drop in yields also reflects a flight to the safety of Treasury bonds. Gold prices are also attracting a safe haven bid. Stock indexes are nearing a test of some important support levels.

200-DAY AVERAGES BEING TESTED... Chart 1 shows the Dow Industrials trading right on their 200-day moving average in late trading. The Dow may be headed for a test of its March low near 25,200. A drop below that level would signal a deeper retracement of its 2019 gains. The Nasdaq is the biggest percentage loser resulting from weak technology stocks. Chart 2 shows the Nasdaq Composite Index bearing down on its 200-day average. If that doesn't hold, the next downside target would be its March intra-day low at 7332. Chart 3 shows the S&P 500 also heading down toward its 200-day line. Its March intra-day low is at 2722 (green circle). That coincides with a 38% Fibonacci retracement of this year's uptrend (top green line), which increases its importance.

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Chart 1

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Chart 2

Chart 3