On Monday stocks traded lower with a cloud of anxiety seeming to settle on Wall Street. It appears investors are growing less and less certain that Europe can contain its financial woes, despite word of a bailout agreement for Ireland.
Those fears hit the currency market with the euro falling to more than two-month lows against the U.S. dollar and breaking the 200-day for the first time since September. In turn, that hurt commodity prices and shares in the materials sector.
"If Europe is having these systemic problems, it brings the question of whether our economic recovery is put on hold," says Angel Mata of Stifel Nicolaus Capital Markets in a Reuters interview.
To make matters worse for bulls, the S&P broke its 50-day moving average for the first time since early September.
Is the market about to crack? What should you be watching?
Instant Insights with the Fast Money traders
Instead of the 50-day I’m watching 1172 as a key level, which was the bounce back from the flash crash, Steve Grasso. That’s the level that market has held. If it breaks now, I’d expect the S&P to go straight to 1150.
Turning attention to Europe, there’s now chatter that Italy and perhaps Belgium may be looking at financial woes, explains Brian Kelly. The Street is worried that Europe will lurch from crisis to crisis. They’ve come up with a Stability Mechanism but in my opinion it will encourages speculators to go country by country and look for one’s that appear challenged.