10 Reasons Why Stocks Continue to Fall Today

October 19, 2007

The Dow is down 200 points today, and close to 500 points for the week. The latest round of weakness has been driven by the following:

1) Major Write-offs from Banks this week
2) HSBC Holdings PLC Downgraded to Neutral from Buy by UBS
3) Wachovia Profits Drop 10 Percent
4) Oil Prices Hit $90 a Barrel for the First Time Ever
5) Bank of America Earnings Drop 32 Percent, Could Shut Investment Banking Division
6) Minor Option Expirations
7) Black Monday 20th Anniversary
8 ) Upcoming G7 Meeting - Pressure on Chinese Yuan and Japanese Yuan and Potential Criticism of Sovereign Wealth Funds
9) Comments from Federal Reserve Officials: Bernanke Says Economic Uncertainty May be a Fact of Life
10) Rumors of Further Layoffs in Investment Banking Divisions Across Wall Street

We believe that the losses should be limited to 13550. Take a look at the following chart, 13550 is supported by not only the 38.2% Fibonacci Retracement of the August to October rally but also the 50 and 100-SMA.

dowchart101907
Source: eSignal