Rally Fading?

It seems that this rally may be ending. After only posting marginal gains the last two days, futures are indicating that stocks are set to lose on the back of a $9.6B loss at Ford. Weekly unemployment and housing figures are also expected to be released today. It is really hard to say with any conviction which way the market is going to go before seeing these figures, but I am certainly bearish overall. Airlines as well as financials have seen unbelievable runs over the last few days and are due for a pull back. Automakers I also see falling (as they have been) further. A $9B quarterly loss at Ford? To me that means that it is pretty much all over for them. We also haven`t seen any bullish analyst calls on financials, which we witnessed yesterday. Mike Mayo called for Wachovia at $30 in the long term and Dick Bove made a bullish call for Wachovia at $17.

Well Wachovia was trading at $18.40 at the time of writing, above Dick Bove`s call, a bearish signal. Also, the rally in financials I believe will look like the rallies in financials that we saw from February to May (big run up over a few days, then a tapering off for a week or two, followed by another big fast run up on good news which brings them higher than at the end of the preceding run up). I believe that if we see a sustained up trend in financials that is what it will look like.

May I add that although oil has dropped $20 to $124 over the last 5 or so trading sessions, lubricating the rise in equities, I feel that the oil will hit resistance at $120 and will start to rise or stagnate around that level. This will stop the rally in airlines and give take some optimism from the market. Now we wait and see what happens.