A Down But Not Out Week

For the week: Dow down 3.7 percent, S&P 500 down 4.5 percent, NASDAQ down 2.7 percent.

The good news was that, on an options expiration day, most major sectors were to the upside. Defense, industrials, techs, energy and consumer discretionary all had modest moves of up 2 to 4 percent.

The bad news is that we were again focused on financials, with Citi and B of A reported losses far higher than expected.

This was a week of reality checks:

1) for bank common shareholders, who have again been reminded that losses will be far higher than anticipated and that the government will continue to dilute their investment, and

2) for the stimulus package, where analysts and investors alike began to realize that the stimulus--even if it is enacted quickly--would not have an effect for months and its impact may be less than imagined.

The declines in major banks this week have been breathtaking:

Citigroup down 48%

B of A down 45%

JP Morgan down 12%

In addition, large regional banks lie Zions , PNC , M&T , and KeyCorp hit multiyear lows.

Barclays rallied a bit late in the day when the British bank said their earnings would be higher than expectations....Barclays and other U.K. banks were down double-digits on concerns of more losses and worries that the U.K. government was considering plans to inject more capital into U.K. banks.

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