Credit Concerns Sink Stocks... Again

The pre-holiday festivities were none too festive as investors got back to work selling stocks on Monday. All major indices were sharply lower, with the Dow dropping more than 200 points for the 4th time this month - a span of only 13 trading days. The Dow has slipped into negative territory in 7 of the last 9 sessions and today's decline was in the red right from the start as traders weighed in with concerns over the banking and financial sector once again.

Goldman Sach's downgraded CitiGroup to a sell, saying that the firm would have to take writedowns on $15 billion worth of sub-prime related debt. That news set a pallor over the entire market and especially affected the larger banking firms, Merrill Lynch, Morgan Stanley, Wells Fargo and CitiGroup.

Dow 12,958.44 -218.35; NASDAQ 2,593.38 -43.86; S&P 500 1,433.27 -25.47; NYSE Composite 9,497.33 -204.05

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Market breadth was decidedly negative. Declining issues slaughtered gainers by a 5-1 margin, while new lows expanded to 907 (nearly 20% of all stocks traded). There were only 87 new highs.

Oil advanced 80 cents to $94.64. Gold lost $9.00 to $778.00. Silver lost 35 cents to $14.16.

With a short week, scant economic news forthcoming, and continued pressure on the financials, prospects for a holiday rebound are fading fast. The Dow and S&P 500 are within shouting distance from the August lows. If the Dow cracks below 12,800, the next support level is roughly in the area of 12,150-12,300. That much slippage would qualify this market as unabashedly in a corrective mode.

NYSE Volume 4,171,323,000
NASDAQ Volume 2,199,688,500