STOCKS PLUNGE ON NEW COVID VARIANT -- ALL ELEVEN SECTORS LOSE GROUND -- TREASURY YIELDS ALSO PLUNGE IN FLIGHT TO SAFETY

STOCK INDEXES PLUNGE... Reports of a new covid variant in South Africa pushed stocks sharply lower the day after Thanksgiving.   As a result, all three major U.S. stock indexes suffered short-term technical damage.   Chart 1 shows the Dow Industrials falling -904 points (-2.5%) and ending the day well below its 50-day moving average.   The Dow is now in danger of dropping further toward its 200-day moving average.  Chart 2 shows the S&P 500 falling below its 20-day line.  Next potential support may lie at its 50-day moving average and/or its early September peak near 4545.   Chart 3 shows the Nasdaq 100 ending the day below its first line of support at its 20-day moving average.

ALL SECTORS LOSE GROUND... All eleven stock sectors lost ground.   Some defensive sectors like healthcare, consumer staples, and utilities held up a bit better than some of the others.  More cyclical sectors like energy, financials, industrials, and consumer cyclicals suffered the biggest losses.   A big drop in crude oil contributed to energy weakness; while financials may have been hurt by a plunge in bond yields.

BOND YIELDS PLUNGE... A flight to the relative safety of Treasury bonds pushed bond yields sharply lower today.  Chart 4 shows the 10-Year Treasury yield falling 14 basis points to 1.49% as bond prices rallied.  Gold also benefited from some defensive buying.  Volatility spiked as well.  Chart 5 shows the CBOE Volatility (VIX) Index surging 47% to reach the highest level since mid-September.  Last Friday's message suggested that weaker market breadth increased the technical odds for a market pullback.  Fears of a new covid variant made that pullback a lot worse.