It looks like the financials are going to rock. Everyone hates them the news about Lehman Brothers has brought everything down, but they had a successful retest last week of their March lows. On the daily chart you can see that XLF has clearly rebounded and is just breaking the 8 day EMA, with the stochastic is rising and separating.
Individually J P Morgan was a great buy coming off of 36. The stock has double bottomed at 36 and it woo has a stochastic is rising and separating. It has raised above its 8 day EMA breaking the downtrend from 50 to 36.
Lehman Brothers has just run smack into its 8 day EMA, but with stochastic rising and separating that my be the best indicator of direction. i.e. long above 8 day EMA and short below 8 day EMA. It looks to be making a lower high at 27.50 if the shares close below that today we will short it with a stop right there.
However the most telling thing for Lehman Brothers is not technical, but the fact that its CEO Jamie Diamon sit on the board of directors of the New York Federal Reserve, a private bank.
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