Financials Enjoy Huge Countertrend Rally
The financials soared today, no doubt about it. WFC spiked +32%, LEH gained +26%, Citi and MER +13%, and GS +9%. I don't think that this reverses the downtrend in financials, but you always see the biggest rally in a bear market, and that's where the financials are.
The bank index as a whole soared +17.3% today, and the homebuilders rose +8.4%. If the homies continue to rise, I would entertain shorting some of them.
Energy stocks sank as oil prices declined for a 2nd straight day. The oil ETF tested its 50-day average, and bounced off of it. I took some profits on my oil services ETF yesterday, even as I still like it longer term. I just feel there is more profit taking to come in this group before they resume their leadership.
The VIX fell another -12% today. And volume was very solid. Everyone will want to know if this is the bottom? But that is too hard to call right now. We need to see if there is any follow-thru to this rally, and then whether or not the market breaks to new lows on any retest.