COLLAPSE IN BANK STOCKS LEADS MARKET LOWER -- PLUNGE IN INTEREST RATES BOOSTS BONDS

BANK INDEX COLLAPSES... A plunge in bank stocks this week has inflicted heavy technical  damage on that group and is weighing heavily on the rest of the market.  The weekly bars in Chart 1 show the KBW Bank Index losing -16% on the week and falling to the lowest level since 2020.  That made financials the worst performer on the week.   The collapse in Silicon Valley Bank which headlined the news at week's end was the biggest since 2008 and raised fears about the stability of the banking system.   That fear spilled into the the rest of the market.

200 DAY MOVING AVERAGES ARE BEING BROKEN... Major stocks indexes are being hit hard at week's end and are suffering serious technical damage.   Small caps are being hit especially hard.   Chart 2 shows Russell 2000 iShares plunging to the lowest level in nearly two months and breaking its 200-day moving average in the process.   Heavy exposure to financial stocks is taking a heavier toll on small cap stocks.  Larger stocks are also selling off.

Chart 3 shows the S&P 500 Index shattering its 200-day line as well.   The SPX appears headed toward a test of its December low.   Market selling is widespread with all eleven market sectors ending the week in the red.

PLUNGE IN YIELDS BOOSTS BONDS... Money leaving stocks is moving into bonds.   Chart 4 shows the 10-Year Treasury yield plunging to the lowest level in a month.   When bond yields fall, bond prices rise.   Chart 5 shows Bond iShares rising sharply.   Falling bond yields usually help stocks.   Today's bond buying, however, looks like a flight to safety.