Look For the Eventual Re-Balancing

Financials are slowly and painfully going into oblivion.

The PHLX KBW Banking Index currently stands at 22.32 down 5% for the day. The all time high is 121!!!

My continued thesis is that the market is trying to manage and gauge what the future holds for the market in general if there are no more publicly traded banks.

My take is that there is not going to be a whole sale or systematic nationalization of the banking system. What is going to happen is the Treasury is going to roll up all of the bad banks that probably wont pass the "Stress Test"

These are the banks that are sure to fail any type of "Stress Test"

Bank Of America
Citigroup
SunTrust
Zions
Fifth Third Bank Corp
Regions Financial
Huntington Bancshares
Marshall & Isley
Wells Fargo
Comerica

These Banks I believe will pass any "Stress Test"

JP Morgan
State Street
Bank Of New York
PNC Financial
BB&T

Does this mean that these particular banks are buys here? NO, but I do think those institutions will likely survive (stay public). Also of note the Metro NY Banks such as New York Community Bankcorp, Astoria Financial, and Hudson City Savings are also seeing severe selling pressure resulting from the potential of a Manhattan Real Estate downturn. I think these institutions in the end have value at much lower levels.

People have also asked me about American Express and Capital One Financial, lets just say I dislike Amex less. I do think that Capital One Financial has a future in its current form, but Amex is a better play all be it at much lower levels.

Mutual Fund managers will eventually have to totally re balance their portfolio holdings away from financials, that is why I continue to believe that Technology is the way to go to "outperform" the market, once the market comes to grips with the impending Financial Funeral.

I believe there is tremendous upside potential in the Energy Sector. Crude Oil is a commodity that is finite in nature, so there is value there...somewhere.