Najarian became very bullish on the financials after word hit the Street that a House financial services subcommittee plans a hearing on March 12th to review mark-to-market accounting rules. Those rules have been blamed for forcing banks to report billions of dollars in write-downs.
If that meeting results in the government relaxing mark-to-market rules, Najarian thinks the stock market could explode. Last week he told us, “if the government relaxes mark-to-market for 12 to 18 months you could see financials move 100% in a matter of hours.”
But that's not all. Another catalyst has surfaced that Najarian also considers bullish for banks. This one comes from the SEC, which has confirmed it will consider reviving the uptick rule.
The uptick rule, adopted after the 1929 stock market crash, allowed short sales only when the last sale price was higher than the previous price. The SEC abolished the rule in 2007, after concluding that advances in trading strategies rendered it ineffective.
“I’d keep a close eye on financials and buy them on the dips," counsels Najarian. "That’s the sector that I’d focus on going forward.”
What's the trade?
On Friday's Fast Money, Jon Najarian suggested looking at a higher risk/ higher reward play – he suggested long the Financial Bull 3x ETF which is triple long ahead of the mark-to-market hearing.
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CNBC.com with wires