Regional Banks An Anchor On Markets

Markets in the last hour:

A strong dollar and lower oil helped stocks today, enough to eke out a small gain of 0.8 percent for the Dow for the week (the only major index that was up this week).

The anchor on the market was regional banks; once again, most hit multiyear lows on continuing concerns of dividend cuts and the need to raise more capital.

There has also been a bit of a seachange in the mentality of traders recently:

1) many are now betting on Fed hikes, sooner than later. Normally, traders would not greet Fed hikes with any pleasure, but the fear of what oil is doing to the economy outweighs the fear of Fed hikes today.

2) the idea that "buy and hold" is a broken trading strategy. Traders have been sharing one and five year charts of big companies like Wachovia Bank, Pfizer,Merck, and General Electric (our parent company), all in an aggressive decline mode and at multiyear lows. Under this theory, the idea of just holding an index like the S&P 500 is not going to be of much help. It essentially turns everyone into a momentum trader; so everyone is now long energy and materials and short financials.

Questions? Comments?