Traders Looking At Financials Again?

Reversing the trade is the key story today:

1) The "buy tech, sell financials" trade--which has been astonishingly successful since July--is showing signs of unwinding as traders nibble on financials.

2) Yen carry trade unwind continues. Traders who borrowed cheap yen and then bought commodities and stocks and bonds outside of Japan for the past few years now appear to be reversing part of that trade, which means they have to sell part of what they bought (e.g. commodity stocks) and cover their short positions in the yen. This means selling precious and base metals stocks, exactly what is happening today.

Another group to watch are retailers, which are also seeing nibbling. They will be the last major sector to report earnings. Among department stores, JC Penney and Kohls will report this week, Nordstrom next week. Low expectations here: UBS said this morning all three are likely to cut fourth quarter guidance. Much of this may already be in the stocks.

Retailers (this quarter):

JC Penney down 25%
Nordstrom down 28%
Kohls down 14%
Talbots down 17%
Limited down 16%


Questions? Comments?