Morning traders.Market wrap: cracks appeared in the six-week...

Morning traders.

Market wrap: cracks appeared in the six-week global rally overnight, with heavy falls in Europe and the US. Financial stocks led markets lower in both continents. Worries about credit losses saw the major US indexes tumble 3.6 - 4.3%.

Banks and REITs were walloped. The S&P Bank Index dropped nearly 15% and the CBOE DJ Reit Index was down 11%. Oilers were also hit hard as the price of oil plunged nearly 9% to $45.88, its heaviest one-day fall in seven weeks. Gold miners provided the only bright spot as investors switched to the traditional safe haven. Gold rallied more than 2%, recently trading at $884.40. Base metals also retreated after last week breaking to recent highs.

Although our market tracks the US, it tends to be less excitable. Consequently, futures traders expect our market to open 67 points or around 2% lower today, which doesn't look bad in comparison.

This pullback has been overdue for a few weeks now, as several have been warning. If you're fairly new to the game, now is the time to exercise discipline. Trade your stop-losses and hold onto the gains of the last six weeks. This might be a mere blip in the uptrend, or it could be the start of a major retrace. It will pay to be cautious until the picture clears.

Gold is the obvious safe haven today. Defensive stocks like health care and consumer staples should also weather the storm better than most but I wouldn't bank on seeing green. An alternative strategy, which I often employ on big red days, is to look for quick scalps in stocks sold down hard in the first 15 minutes. These are quick bounce trades and it pays to be fast to take profits or lock in a small loss and move on.

Good luck to all.