A few years back I penned a letter that surprised my partners. I showed the stock market’s extreme over-weight in the Financial Sector -- in the low 20%s -- was a far bigger problem if you included the financial service units of “manufacturing” companies like General Electric (GE).

By our work, the actual weighting of index investor’s allocation to the business of lending reached about 30% two years ago - right at the very worst time. This proves once again how inefficient market capitalization weighted decisions are. It also shows what a powerful data set they provide in determining when the longs’ plates are too full in a given sector.

We argued financials were as equally crowded by longs as Technology and Telecomm were eight years before, but with the potential for far worse fundamentals. Things are so clearly bad and so well examined, I feel comfortable surprising those same partners again when we share our interest in buying stocks. Our yellow pad indicator is now longer than it has been ever since.

The first reactions this morning were that GE’s miss now presents more questions for the market. I can't help but see the opposite: more answers.

Look at infrastructure and energy businesses where you not only find growth, but accelerating growth, instead of lending money to people or institutions that can't pay you back. Look for positions in other countries paying you in non-dollar currencies.

Look longer term at health care acquisitions (but be careful because for the next few years nobody seems to want to pay for any of this stuff).

While the media quoted the Goldman Sachs (GS) analysis of the miss, I immediately looked for even more misses. Most will overlook the fact that pennies in revisions moved important stocks higher today.

K&C’s Trading Rule #19: “Hit ‘em where they ain’t.” Among the most consistent plays in our book on days like today is to not touch the name blazing the headlines. Instead, carefully to examine the back pages for rising numbers that get forgotten and looked back upon fondly, often the very next week. Johnson & Johnson (JNJ) and Conoco Phillips (COP) caught my eye.

Most telling longer-term?

Don’t wait and hope another conglomerate (the United States) starts working. Break it up and pick and choose. My take-away from this terrible earnings miss is that it may prove the very best script to follow. Not for a new question, rather for another confirmation of this decade’s growth industries and geographies.

Best guess short-term?

Nearby earnings estimates may be way too high. But the market will provide a far better clue today, and this later month about something that controls stocks prices even more. Earnings from the supply and demand for its products are always trumped by an imbalance in supply and demand for its shares.

Are big sellers of stocks running out of inventory to mark down? Look at the center of the financial sector’s storm, Citigroup’s (C) reaction to the news today. In order for bidders to find shares for sale they are offering several cents more than yesterday.

If it closes there today it'll make me say ... hmmm.