FALLING BOND YIELDS PUSH BANK INDEX TO NEW LOW -- AIRLINE INDEX FALLS TO THREE YEAR LOW -- CRUISE, GAMBLING, AND HOTELS CONTINUE TO SLIDE -- TODAY'S STOCK SELLING THREATENS REBOUND

BANKS AND AIRLINES HIT NEW LOWS... Another record low in bond yields and a continuing flight to the safety of bonds (and gold) are helping put stock prices under heavy selling pressure today.   The biggest sector losers are financials, energy, industrials, and cyclicals.   It's not hard to understand why.   Plunging bond yields are bad for financials, and banks in particular.  Chart 1 shows the KBW Bank Index falling to the lowest level in more than a year.   Energy is being hurt by another drop in the price of oil.  Industrials are being weighed down by falling airline stocks.  Chart 2 shows the NYSE Airline Index falling to the lowest level in more than three years.  That's helping push the Dow Transports to the lowest level since the end of 2018.   Stocks tied to travel and tourism are also hitting new lows.

TRAVEL STOCKS HIT NEW LOWS... Cyclical stocks are being weakened by new lows in cruise lines, gambling, and hotel stocks.   Cruise liners are the weakest part of the S&P 500 today.   Chart 3 shows Royal Caribbean Cruises (RCL) falling to the lowest level in more than three years.   Carnival (CCL) and Norwegian Cruise Line Holdings (NCLH) are also hitting new lows.  It seems doubtful that the current slide in stock prices can stabilize until those stocks most directly effected by coronavirus stop falling.  There's no sign of that yet.

S&P 500 BACK UNDER 200-DAY AVERAGE... Yesterday's message showed the S&P 500 having retraced 50% of its recent stock decline, and nearing a test of overhead resistance at Tuesday's intra-day high at 3136.   After approaching that high yesterday afternoon, the 30-minute bars in Chart 4 shows the SPX gapping lower today and failing that initial test (red circles).  It's now nearing a possible test of initial support at Tuesday's intra-day low at 2976.  A close below that level could signal a retest of last week's low.   The SPX is also back below its 200-day average.

VIX RETESTS 40 LEVEL... Yesterday's message also showed the CBOE Volatility (VIX) Index falling back below 40 which was supportive to stock prices.   The 30-minute bars in Chart 5, however, show the VIX trying to climb back over 40 today.  That's another important test for stocks.   A rising VIX is usually bad for stocks.