Financial resiliance - speaking too soon?

Positions
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+100 FAZ @ 17.36 vs. cost @ 17.02
+100 GS @ 117.15 vs. cost @ 74.79, stop @ 105
+2000 UYG @ 2.83 vs. cost @ 2.00

Markets
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Despite a near 3% downturn to start this holiday shortened week, many financials have exhibited impressive resilience. Jim Cramer perhaps sparked a fire when he announced a buy on Citi, and Goldman Sachs was up most of yesterday on rumors that the company is in talks with the Government to give back the TARP money post stress testing. GS couldn't hold onto the gains into the close, but the run was impressive. During this downturn, any negative commentary from key figures (George Soros, Analyst Michael Mayo) would have pulled the rug from under financials.

The risk-reward profile in being long financials is attractive, given the 6 month hammering. Even though many analysts and pundits are still calling for Armageddon, missing out on a financial rally would be costly to money mangers. I think financials are holding ground because of next week's earnings calendar and the dearth of economic data this week. GS reports on Tuesday, 4/14 and the consensus has risen to $1.698. C reports on Friday, 4/17 and the consensus is -$0.339. Other financials are expected to report as well and just this morning, Oppenheimer lowered its view of Q1 MS loss and said that Bank of America would need a capital raise of nearly $37B by year-end.

Pulte Homes agreed to buy Centex in a $1.3B deal. The deal is the first for the battered home building industry and would create the largest US homebuilder by market capitalization and volume. Yes - I know, market capitalization doesn't mean too much to financials and home builders, but this will likely keep both companies afloat for the duration of the downturn.

Live from Queens,
TM