Stocks slide for the second day in a row. The media is pointing fingers at a lousy read on existing home sales data but it could just be an excuse to take profits in an overbought market. Weekly jobless claims improved. The G20 economic summit began in Pittsburgh today. Meanwhile the U.S. dollar is bouncing, up for its second day in a row, which is putting pressure on commodities.

Foreign markets were mixed. In Asia the Japanese NIKKEI finally opened after a five-day holiday. Stocks rallied 1.6% as the NIKKEI surge to a new one-month high. The Chinese Shanghai gained 0.38% after a sharp two-day decline. The Hong Kong Hang Seng lost 2.5%. In Europe stocks were down across the board with selling accelerating on the disappointing U.S. home data. The English FTSE lost 1.1%. The French CAC-40 gave up 1.6%. The German DAX fell 1.7%.

The big story today was the National Association of Realtors (NAR) existing home sales report. Expectations were high for another positive reading in August, which is normally the high point of the season. Economists were expecting the annual sales pace to reach 5.35 million units. Unfortunately August sales fell 2.7% to a 5.1 million pace snapping a four-month trend of gains. The decline was even more surprising since the $8,000 new home buyer tax credit is set to expire at the end of November. Analysts were expecting more of a rush to close on a home before the tax credit disappears.

Existing home inventories fell from 4 million to 3.6 million, which would normally be a positive development but analysts have been speculating for months about the massive amounts of "shadow" inventory not officially on the market. The median sales price fell 2.1% from the prior month to $177,700. Year over year home prices fell more than 12%. The DJUSHB home construction index is down 3.1% on the session.

The jobless numbers were more encouraging. The Labor Department said weekly initial jobless claims fell 21,000 to 530,000 compared to 551,000 the week before. Continuing claims fell to 6.14 million but that's likely to reverse higher now that congress just extended unemployment benefits again. Next week's non-farm payrolls data will provide more light on the labor market.

Yesterday the stock market produced a bearish reversal while the U.S. dollar produced a bullish reversal. The dollar continues to rebound today, which is dragging commodities lower. Gold futures are down more than $16.00 to $998 an ounce. Crude oil broke down under significant support yesterday and the selling continues with another 4% decline and a drop to $66 a barrel. Copper prices have broken down through the bottom of a multi-week trading range.

The S&P 500 index is off 1.1% near 1,048. The index could see a bounce near 1045-1047, which would be the 38.2% Fibonacci retracement of the September rally. The NASDAQ composite is off 1.4% and trading near the 2100 level. The Dow Industrials are down 0.6% at 9685. The small cap Russell 2000 index is off 2.2% and falling toward the 600 level.

Let's take a quick look at charts for the major averages:

Chart of the S&P 500:

Chart of the NASDAQ:

Chart of the Dow Industrials:

Chart of the Russell 2000 index:

The stock market is correcting and I'm seeing a lot of profit taking on the play list. ACL is off 2.4% and back down near $140. ATI is down 3.9%. CAT is down 3.6% and approaching our entry point at $50.50. CNX is off 3.7% but we're looking for a dip near $42.50. Oil services stock DO is testing the $91.00 level and its long-term trendline of higher lows. GWW is testing short-term support near $88.00. IBM is slipping but has not yet broken support at $120. MTD has fallen sharply toward the $88.00 level. NYX is falling toward support near $28.00. WFC has fallen under the $28.00 level. Look for a bounce before considering new positions.