Stocks plunged around the world as fear spread that other European nations may need additional economic assistance. This sparked a strong flight into quality which sent the greenback higher and a slew of dollar denominated assets lower; mainly stocks and commodities. The euro skidded to a one year low against the dollar as fear spread that the entire EU may disintegrate.

The NYSE Composite Index was the first popular index to slice below its respective 50-day moving average (DMA) line, a technical violation which bodes poorly for this 10-week rally. Meanwhile, the other major averages fell back toward their respective 50 DMA lines. It will be critical to see if the bulls show up and protect this important area of support or if the bears manage to continue sending the market lower. Over the past two weeks, this column has consistently mentioned that the major averages have been steadily rallying since early February and a pullback of some sort should be expected. Furthermore, we mentioned that the current rally was under pressure due to the disturbing number of distribution days that emerged in recent weeks. 

Taking the appropriate action on a case-by-case basis with your stocks prompts investors to raise cash when any holdings start getting into the trouble zone. A reminder was added to many Featured Stocks' notes today - Broader market action (M criteria) is normally expected to impact 3 out of 4 stocks, and widespread losses are adding to concerns about the current rally's tenacity.  Trade accordingly.

PICTURED: The NYSE Composite Index suffered a 50-day moving average (DMA) line violation and slumped under prior chart highs.  That marked its first 50 DMA line breach since the March 1, 2010 follow-through-day.

Charts courtesy www.stockcharts.com

PICTURED: The Broker/Dealer Index's ($XBD -3.14%) loss led to the first close below its 50-day moving average line since early March.

Summer Infant Inc (SUMR  +0.25 or +3.70% or $7.00) closed the session 2 cents above its best prior close, but not above its pivot point. Featured in the mid-day report (read here) earlier today - "Inching into new high ground this week on the right side of a 7-week flat base above its 50 DMA line and well above prior chart highs in the $5 area. Color code is yellow with pivot point noted based upon its 3/15/10 high plus ten cents. Quarterly earnings (C criteria) in the 2 latest quarterly comparisons showed great increases while sales revenues growth accelerated to +27% in the period ended Mach 31, 2010. It has a good annual earnings (A criteria) history, and a small supply (S criteria) of only 11.0 million shares in the public float. Technically, a gain and strong close above its pivot point with heavy volume would trigger a buy signal."

Earlier mid-day report appearances included notes (which can be reviewed using the "view all notes" link on any stock) that were critical of the company's prior sales and earnings growth history. Recent quarterly comparisons show sales revenues growth accelerating and big earnings increases (triple digit percentages), plus it has a good annual earnings (A criteria) history.  Low-priced stocks are supposed to be avoided under the fact-based system because they are typically riskier candidates, however, when all key criteria are satisfied and market conditions are bullish buying efforts may be justified. Broader market action (M criteria) is normally expected to impact 3 out of 4 stocks, and widespread losses are adding to concerns about the current rally's tenacity.

Color Codes Explained :
Y - Better candidates highlighted by our staff of experts.
G - Previously featured in past reports as yellow but may no longer be buyable under the guidelines.