Good Morning. There were a number of divergences last week when the market made a new high. Momentum indicators lagged the rally for the first time since July. Small caps and financials also showed relative weakness on the most recent rally, whereas earlier in the rally they were leaders. This is an indication of a market that is tired.
Tim Geithner urged banks to raise private capital in a speech early last week. Banks have been trying to earn their way out of their capital holes, with the US taxpayer paying for their put options. If financial companies heed Geithner's call I believe the market could get ugly. The market is stretched and showing signs of weakness. A supply shock in the form of heavy stock issuance in the financial space would likely be the final nail in the coffin.