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Borrowing a great observation from Todd Harrison, unless financial stocks can catch and hold a bid, the market will continue to go down. Going into quarter’s end, naturally, there isn’t a fund in the world that wants to be shown holding blocks of the toxic banks, monolines, and their brethren. Hence, the kind of high-volume slaughter that’s taking place across the board. What in particular?

American Express (AXP) down 5% on 2.4x trailing three month average volume
Bank of America (BAC) down 6.76% on 2.1x volume
Capital One (COF) down 6% on 1.7x volume
Citigroup (C) down 6.26% on 2x volume
MBIA (MBI) down 10.6% on 3x volume
Wells Fargo (WFC) down 5.24% on 1.8x volume

Even JP Morgan (JPM) and Goldman Sachs (GS) are getting hit hard – and weren’t they supposed to be the big winners left standing in this financial shakeout? Additionally, Visa (V) and Mastercard (MA) – the card companies you always hear about as having no credit exposure (though I disagree with that statement) – are getting taken out to the woodshed along with pretty much every other financial name. The other day, I said that there is going to be an enormous degree of uncertainty about the profitability of many of the larger financials for a multi-year period until they can find a model that works with reduced leverage. Accordingly, I’m limiting any potential purchases in that sector to companies where I’ve stress-tested the potential losses, and am comfortable with the results. So far, only American Express and Primus (PRS) have passed that test.

Is there an end to the selling? The only technical analysis system I’ve seen and have some chance of replicating is the one used by Tom Stone.