One of my other favorite stock blogs, Zero Hedge, hit the nail on the head as far as summarizing today’s action. Tyler wrote just after the close:
Following 5 days of persistent refusals to deal with reality, the real world finally came back with a bang, and while the overall market tumbled the most in two months, it is really financial stocks that took the brunt of today’s beating. As the chart below shows, the XLF has literally collapsed with most major banks on the ropes, and the broker dealer index down 6.45% the most since August 10. The reason? Italy of course, and the fear that once the country is forced to write down its debt, the bank failures will proceed in waves: first Italian banks, then French, and then everyone else, especially those that have already been in the market’s crosshairs for their exposure. And if today was ugly, tomorrow promises to be an absolute bloodbath with Italy deciding to proceed with the issuance of €5 billion in 1 year Bills into what may well be a bidless market.
Read the full post for a slew of charts and other commentary. Note, XLF is the ETF tracking the Financial Select Sector Index and it traded down 5.4% today.
Updating our charts of the markets, the NASDAQ and S&P 500 remain in their most recent horizontal channels but given another day like this, they will easily be testing their key trendlines and 50 MAs for support.