XLF

Short XLF - The XLF was driven below its 50 sma, a level that has provided support over the past week or so, on news of Wachovia's reckless investments in a Citigroup hedge fund and estimate cuts for several investment banks. The XLF hasn't participated in the last part of the broad market rally and has looked relatively weak in past weeks. This action shows that banks (except USB, GS) still have no credibility and are in a good position to be sold off. Bad news was good news for a while, but sentiment has turned after a strong rally to the 200 sma has worn out and consolidation/pullback has become more likely. Given this shift, I don't think people will be willing to step into the weakest sector this early into a pullback giving the etf more downside from here.