STOCKS SELL OFF ON WEAK ECONOMIC NEWS -- BANKS DROP ON WEAK EARNINGS -- ENERGY AND FINANCIALS ARE DAY'S WEAKEST SECTORS

WEAK ECONOMIC DATA CAUSES PROFIT-TAKING IN STOCKS... A lot of weak economic reports today are causing profit-taking in stock prices.  Weak bank earnings are making that group one of the day's weakest.  A 10 basis point drop by the 10-year Treasury yield to 0.64% may also be hurting banks; and also reflects a more cautious tone in financial markets.   A plunge in retail sales, the weakest U.S. factory output since 1946, and a record low in the NY Factory Index are also weighing on stock prices.  And it's happening near some potential chart resistance levels.

S&P 500 BACKS OFF FROM POTENTIAL OVERHEAD RESISTANCE...The daily bars in Chart 1 show the S&P 500 backing off  from several potential resistance points.  One of them is the trendline drawn under broken October support at 2855.  That's because a broken support level often becomes overhead resistance.  The second potential barrier is the middle 50% Fibonacci retracement line which often acts as overhead resistance as well.  The third potential line is the 50-day moving average at 2881 (blue circle).  It remains to be seen if today's selling is just a minor pullback or something more serious.   But from a technical standpoint, the recent rebound in stock prices has reached some potential resistance barriers where some profit-taking is more likely.

ENERGY AND FINANCIALS LEAD DAY'S DECLINE...All eleven sectors are in the red this morning.The two holding up better are defensive consumer staples and healthcare.  The two weakest are energy and financials.  Banks are among the biggest losers in the XLF.   The weekend agreement between OPEC, Russia, and U.S. to reduce output hasn't helped the price of oil which continues to weaken.  Which is keeping energy the market's weakest sector.