The media has been making comments about the financials having hit their bottom. We won't dispute the fact that the financials have been oversold and in a down trend for a long time. The current chart on the Banking Index clearly shows the precipitous drop that it has seen since mid-2007.

The Banking Index is showing short term strength that should play out in the next few days. That strength will also move to a high Relative Strength reading which will put in overbought territory fairly soon.

The real issue relative to the media declaring a bottom is the trend of the Banking Index. Trends are defined as an investment instrument making higher/highs and higher/lows for an up trend ... and making lower/highs and lower/lows for a down trend.

So which condition do we have right now? The index has not changed since last July ... it has not moved out of the lower/highs and lower/lows pattern.

There are signs that it could move into a sideways consolidation, but that precedes a condition where a stock or index moves into a new longer term rally condition which would mean a new pattern of higher/highs and higher/lows.

The Bear Stearns problem seems to have been resolved by the Fed. Is it not bothering anyone that other Wall Street Investment firms are now going to the Fed's window for cash? The mere fact that they are doing so indicates that they have some serious problems that they are trying to fix. It does not mean that these problems are fixed ... it really means that they are trying "to buy the time" to fix them.