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Global Growth Suffering Along With Financials


...the most dedicated of the Buy the Dip on Growth stock buyers didn't catch the bottom; they bought the post-spike rally of last week. Those buyers are now underwater.

Global Growth is getting dragged behind the woodshed today. Names like Freeport-Mac (FCX), BHP Billiton (BHP), Alcoa (AA) or US Steel (X) are all down more than the market.

The YTD charts in the group bear more than a passing resemblance to financials of all stripes (Goldman (GS), Bear (BSC), Citi (C), Lehman (LEH) or pretty much whoever else you'd want to throw in there, including the XLF).

As a group, the financials peaked the morning the Fed announced its presence with authority with the Expiration Friday Discount Window move. The "stuff" stocks (metals and ag plays like Potash (POT) et al) which were crowded longs for all of 2007, took a few more days to claw their way back but are rolling over again in earnest today.

Two Points: First, from where I'm sitting, the most dedicated of the Buy the Dip on Growth stock buyers didn't catch the bottom; they bought the post-spike rally of last week. Those buyers are now underwater ("weak hands").

Two, as is the case with the Dip Buyers, the Fed and its statements have used up a lot of dry powder. We already know it is intervening; now the question becomes one of whether or not they can help (and, yes, I know the voting from most here is "No, the Fed can't help").

I'm expecting Diminishing Upside Returns for rallies off Fed Statements and Snapper efforts in general. You can try anything long or short, but the most critical thing here is to have an exit plan and the discipline to use it; if I were long the financials here, I'd be hitting the gates.
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