With bond market traders taking the day off in observance of Veteran's Day, stocks have been under selling pressure and remain near their lows of the session, hit lower in the past hour after an Iraqi parliament official said that many United Nations demands "cannot be met."
While Iraq has until the end of the week to respond to recent U.N demands for total disarmament, the Dow Industrials (INDU) 8,406 -1.53% extended its losses from earlier levels
In overseas action, European and Asian markets were both lower on renewed geopolitical concerns, while the dollar came under pressure against the euro.
Over the weekend, the New York Times reported that the U.S. is preparing to send in between 200,000 to 250,000 troops to carry out a short bombing campaign in Iraq. The plan would feature swift ground actions coupled with air strikes, the paper said, citing unnamed sources. On Friday, the U.N. Security Council voted 15-0 to approve the U.S.'s resolution on Iraq, igniting an equity market sell-off.
December Light,Sweet Crude futures (cl02z) $26.36 are jumping 2.2%, with near-term resistance at $27.50. Come crude oil analysts believe oil could jump to as high as $40 per barrel on a U.S.-lead attack against Iraq. However, energy-related equities as depicted by the Oil Index (OIX.X) 252 -0.47%, Oil Service Index (OSX.X) 83.65 -1.76% and Natural Gas Index (XNG.X) 132.42 -2.4% are trading lower.
S&P 500 Index Chart - Daily Interval
From our Index Trader Wrap this weekend, we thought every index trader or market participant would be monitoring the SPX to see if it could hold its 21-day SMA as support. Today's action shows a break of this shorter-term SMA and the other major indexes have fallen back to their 21-day SMA's. If the SPX had hold a close above the 879 level, then bulls may look for a rally back near 914 over the next couple of sessions, with a close eye on the Treasury markets tomorrow morning when they open back up for trading. With the bond market as a guide today, equity investors are taking caution and protecting gains in equities as they are without the guidance the bond markets give as it relates to the markets view of "risk."
The often-times perceives safety of "gold" has the Gold/Silver Index (XAU.X) 67.76 -1.68% seeing selling, while the December Gold futures (gc02z) trade down 10 cents at 321.60.