SEPTEMBER LOWS ARE BEING THREATENED BY STOCK SELLOFF-- VIX REACHES FOUR-MONTH HIGH

DOW TESTS ITS SEPTEMBER LOW... Monday's message suggested that the breaking of 50-day averages increased the odds for a test of September lows.    The Dow is already there.   Chart 1 shows the Dow Industrials sitting right on their September low near 26,500.  And not too far from their 200-day moving average (red arrow).  Chart 2 shows the S&P 500 also dropping toward its September low.   Chart 3 shows Nasdaq 100 (QQQ) also heading in that direction.  The big question now is whether or not the September lows hold.

All eleven market sectors are in the red with the biggest losses in energy, communications, technology, healthcare, and industrials.    While Treasury prices are modestly higher, high yield bonds are falling with stocks.   A firmer dollar is putting downward pressure on commodity prices including gold.  Europe is leading the retreat in global stocks.

VIX AT FOUR-MONTH HIGH... Chart 4 shows the CBOE Volatility (VIX) Index rising above its September high to reach the highest level since June.   That's not an encouraging sign.