The S&P 500 recently slammed through its 200 day moving average and investors cheered this as the beginning of the next bull market, however, the most critical component of this rally has stalled out and appears to have run into a bit of a roadblock.  As I mentioned yesterday, the banks have been unable to break through the 200 day since the credit crisis began in 2007 and the divergence between banks and the rest of the market is worrisome to say the least.  As the primary culprits of this crisis and the lifeblood of the economy its diffuclt to imagine a scenario in which the banks trade lower and the overall market trades higher.

After a 40% rally and an 80%+ move in bank stocks the overall market could take a breather here for a few weeks.   The short sellers appear to be putting up their first real fight in months as something more than contrarian perspective douses the bulls’ green shoots outlook.