- The Geithner Affect On Markets
- What Citi Is Doing
- Why This Was A Different Sell-Off
- Trader Voices Growing: Break Up Citi
- Trouble With Stocks: Lost Identity
- The Doomsday Scenario For Automakers
- Money Manager Peter Schiff Had It Right In 2006
- Traders Expecting Market Rise At Today's End
- Why There's No Market Rally
- Guidance Is Now A Tricky Business
- Out with Cox, in with Uptick Rule
- Pops & Drops: Hewlett-Packard, JP Morgan & Air Wagoner
- Mad Money Green Week: Owens Corning
- Fast & Furious: It's All About Soup
- Web Extra: The Trade on Walmart and RIMM
- Chartology: Grossly Oversold and Favoring the Upside
- The "Armageddon" Gameplan
- What's Next for Citigroup?
- What to Expect From a Geithner-led Treasury
- Global Markets Want Catalysts For Buying This Week
- Economic Team Obama: Will It Help Settle Markets?
- American, Asian Leaders Push Free Trade To End Crisis
- Citigroup Talks, But Nothing 'Walks' To Stabilize
- Soros: More Money Needed For U.S. Bailout
- HP Earnings: How Much Will "Hurt" From Economy?
- Obama Warns On Economy: Works On Stimulus Plan
- Citigroup's Ills May Signal Market Isn't Near Bottom
- US Inflation Bonds Hit by Deflation, May Recover
More Videos
Text Size 
Is there any doubt that big-cap financials are the key to this market?
What's worked for two months? Sell the rally in financials. This is crunch time for the two-day rally...and not surprisingly, they are pushing the old trade hard today.
The two most important stocks are Citi [C
Loading...
()
] and Merrill [MER
Loading...
()
]. Citi had a loss, but better than expected, and since the fourth quarter they have progressively cut the losses in half (from a loss of $1.99 to a loss of $1.02 to a loss of $0.49). Bad by historic standards, but a steady improvement.
Merrill took bigger writedowns than expected, a bigger loss than expected, and already bulls are arguing that this is another "kitchen sink" quarter for the company (they said that last quarter). Still, the overall numbers are still so weak it's hard to argue for any kind of rally here.
What is likely to happen here is a bifurcation of financials: those that are considered the best-managed, lowest-risk, like JP Morgan [JPM
Loading...
()
], will outperform the others, and this is how it should be. But this time, they may outperform by a wide margin.
Already, regional banks like Huntington Banc shares [HBAN
Loading...
()
], Zion [ZION
Loading...
()
], Fifth Third [FITB
Loading...
()
] are back to their Sell on Rally mode, down 5-9 percent. However, brokers are clearly looking to hold their gains, Merrill is trying to go positive, and Lehman [LEH
Loading...
()
] is up nearly 5 percent.
Finally, I don't want to act like I'm ignoring tech. There are problems here. I won't do fundamentals, I'll make it simpler. Consider that:
1) tech was considered a safe haven;
2) tech is now the largest sector of the S&P 500 (16.4 percent);
3) Google [GOOG
Loading...
()
] and Microsoft [MSFT
Loading...
()
] make up about 18% of the tech index.
related content |
Questions? Comments?
Del.icio.us
Digg It
Data is a real-time snapshot *Data is delayed at least 15 minutes