NASDAQ AND TECHS LEAD MARKET LOWER … Tech stocks and the Nasdaq are leading the rest of the market lower. Chart 1 shows the Nasdaq 100 (QQQ) falling more than 2% today and bearing down on its 50-day average. The Nasdaq is the weakest of the major market indexes. Falling technology shares are the main reason why. Chart 2 shows the Technology Sector (XLK) sitting right on its 50-day line. It’s also the day’s weakest sector. Semiconductors are leading it lower.
TAKING CHIPS OFF THE TABLE… Chips stocks have gone from market leaders to market laggards. Chart 3 show the PHLX Semiconductor ETF (SOXX) falling below its 50-day average and drawer closer to its 200-day line. Chart 4 shows Micron Technology (MU) falling below its 50-day line. Chart 5 shows NVIDIA (NVDA) doing the same.
DOW AND S&P 500 ARE ALSO TESTING MOVING AVERAGES … The Dow and S&P 500 are under pressure today and testing moving average support lines of their own. Chart 6 shows the S&P 500 sitting right on its 50-day average (blue circle). Chart 7 shows the Dow Industrials sitting on its 200-day line (red circle). Those are pretty important tests for them and rest of the stock market. Consumer discretionary stocks, energy, and materials are also leading today’s stock decline. Investors are rotating into defensive consumer staples and rate-sensitive utilities. Another drop in bond yields is boosting bond prices. Europe and China are leading another selloff in foreign stocks. It looks like global financial markets are taking the threat of a trade war more seriously.
THE VIX INDEX IS CLIMBING … Today’s big jump in the Volatility (VIX) Index also shows rising investor nervousness. Chart 8 shows the so-called “fear gauge” rising 30% today and threatening its late May intra-day peak at 18.78. A close above that chart barrier would put the VIX at the highest level in two months and would be a negative sign for stocks.