Have We Rolled Over?

After touching the 200 day moving average the sellers came in mass today. Is that it? Has this massive bounce ended? I would not say it is certain but we may be close. Several signs have popped up. I have thought we were in a topping phase though admittedly about a 20 S&P points ago. The biggest thing that seems to have changed is the financials. The financials have led this market up with the XLF busting through 27. It is now leading this market down. Last week the banks were the worst performing sector in the market finishing down on the week while the S&P and NASDAQ surged over 2.5%. Even at the markets peak yesterday when the Dow was up 150 XLF was flat. Today it got murdered. The markets cannot keep going higher without the financials participating. The bulls would argue it was just a Meredith Whitney sell off but there are other issues. CIFG (one of the smaller less known bond insurer) got its rating cut to junk today. It did have a AAA rating a few years ago, oh no I am sorry, I mean March. In less than 3 months it got cut from AAA to Ba2. Nothing like the rating agencies to stay on top of a business deterioration. Other things that have been telling is the return of bullish optimism. Also the Japanese Yen has been strengthening in comparison to the U.S. dollar the last couple of weeks and broke through 104 again. Once again I think the whole oil thing given as a reason is a bunch of blawhoie. Is 129 really different than 128 compared to 125 compared to 120? I have said many times it doesn't matter on Wall St. until it does so I think it mattered a long time ago and now maybe Wall St. will really start looking at it since it seems to be affecting retailers (surprise surprise).

Who knows. I am definitely not betting on it either way (though I did sell some covered calls on my second largest position yesterday as the market looked like it was starting to roll over) and I really wouldn't be surprised to see us test that 200 day moving average again but if we are in a bear market bounce this one should be about done and it would be classic in length and breadth. I said back on April 1st (http://marketseer.blogspot.com/2008/04/market-thoughts.html) I would not be surprised if the S&P bounced in the 1400 to 1450 range (1450 was where the 200 day moving average used to be). We are right there. Maybe it has the muscle to get to 1500. I sort of doubt it but time will tell. The bulls have not packed up and gone home because of one miserly pullback after the massive rally last week. That is for sure.