The direct inverse correlation with the financials and interest rates continues…that’s long end interest rates. As the 10 year yield was whacked down to 2%, financials headed lower with with the regionals bearing the brunt. All it took was rates to back up for 2 days and we get a 2 day romp back up in the financials. The theory being as long rates go up, margins expand. Margins expand, profits expand. Profits expand, stock prices go up.

Look how GS (which still lags) was breaking another area of support badly…in 2 days, back into the high end of resistance. The KRE (regionals) which still acts poorly, undercuts a multi-month low and reverses back above. The best looking name remains Citi (C) as it has had the best relative strength since  early June…but only just getting back above 50 day average today. Really no leadership yet in this group.