STOCKS TURN LOWER ON WEAK MANUFACTURING DATA -- MAJOR STOCK INDEXES WEAKEN -- WEAKEST SECTORS ARE INDUSTRIALS, MATERIALS, ENERGY, AND FINANCIALS -- TRANSPORTS FALL BELOW 200-DAY LINE -- SO DOES RUSSELL 2000 -- ONLINE BROKERS TUMBLE
STOCK INDEXES ARE UNDER HEAVY SELLING PRESSURE...The weakest U.S. manufacturing number in ten years turned an early stock rebound into a bout of heavy selling. And the short-term stock picture continues to weaken. Chart 1 shows the Nasdaq Composite Index failing an early attempt to regain its 50-day moving average. Chart 2 shows the S&P 500 in danger of falling below its 50-day line. Chart 3 shows the Dow Industrials bearing down on its blue line. All eleven stock sectors are in the red, with the biggest losses in industrials, materials, financials, and energy. Energy is being pulled lower by falling crude oil prices. A drop in bond yields is hurting financial stocks. So is a big drop in online brokers (more on that shortly). Industrials are being hurt by falling transportation stocks. The Russell 2000 Small Cap Index is trading below its 200-day average.
SMALL CAPS AND TRANSPORTS BREAK 200-DAY LINES...Chart 4 shows the Russell 2000 Small Cap Index falling below its 200-day moving average for the first time in a month. Chart 5 shows the Dow Transports doing the same. That's not a good sign for them, or the rest of the market. Neither is today's plunge in online brokers.
ONLINE BROKERS TUMBLE...Chart 6 shows the Dow Jones US Investment Services Index tumbling sharply today and nearing a test of its August low and 200-day average. An announcement that Charles Schwab (SCHW) would soon stop charging commissions for U.S. stocks, ETFs, and options for its online accounts pushed that stock -10% lower today. Two other online brokers tumbled even more. TD Ameritrade (AMTD) is down -24%, while E*Trade (ETFC) has lost -17%. They're the weakest part of the financial sector. Falling bond yields are also weighing on banks and life insurers. That's contributing to a generally bad market day.
