Thursday Was a Huge Day for This Market

Jun. 6.08 | About: Financial Select (XLF)

I expressed concern recently when Investors Business Daily declared that the market was in correction. I respectfully disagreed. I suggested to one of my clients that it must have been interesting to be sitting at that table and coming to that conclusion, as it was highly debatable. In the end, the strength of the NASDAQ, mostly immune from rising fuel prices and deteriorating credit concerns, was the tell. So, it pleased me immensely Thursday when IBD declared that the uptrend is alive and kicking.

Folks, Thursday was a big, big day. ABK and MBI got the downgrades, and it impacted the market for only a nanosecond. Perhaps even more interesting to me, Mr. Einhorn, huge Lehman bear, admitted on CNBC that the Fed would not let LEH fail. That makes me feel better as an XLF bull - LEH won't be taking down the house. Small-caps and the NASDAQ motored to a new post-March high on good volume. If one is short this market (there are lots who are - check out the recent short-interest data), one should be investing in Hanes (NYSE:HBI). Talk about a replacement cycle!

Lest I come off as some big-ego told-you-so, let me be the first to say that I have been SO WRONG. I have bet heavily on financials, and that hasn't been the place to be thus far. Luckily, that isn't the only sector that has interested me. I admit to being early, but I am more confident than ever that we are about to experience the mother of all short-squeezes in the sector. I wrote about FNM not too long ago, and I still like that name a lot (as well as the several small-cap names I have shared). XLF is due for a big bounce - look for a 30+ print this month.