There is a long line of support to the left for the XLF. I’ve said forever that that is the level to watch. The stock broke $14 today (13.99) and rallied a few cents, but the unraveling may have begun as the closing down volume was very strong.
Volker announced that next week that there will be discussions on bank regulation. Volker is not a dove on this topic as it was his idea in the first place to wave the regulation wand. The street knows that, and the financials sold off very quickly late in the day and on good volume.
Tomorrow is Fed day, tomorrow night is the State of the Union address and Thursday morning we have the decision on Bernanke, in the midst of all this we still have an onslaught of earnings reports.Let’s not forget that the Geithner inquisition starts tomorrow at around 10am, it should be great theater so tune in. It promises to be volatile at the very least.