In a note yesterday morning to members, we were looking for an oversold rally, and said rally still has yet to materialize in any big way.  We still think the S&P will close the week closer to 1300 than to 1250, but that’s a conviction loosely held.

The two biggest questions on our minds for the remainder of the week are:

Will the financials stop dragging everybody down?  $BIX, $BKX, XLF all had a good day today, but they need to hold these levels. Will the Nasdaq leadership resume?  NDX, AAPL, RIMM all had a positive close, but some follow-through will be crucial.

Some items worth perusing tonight:

Brett Steenbarger on using the relative strength of XLY vs SPY as a gauge of investor sentiment. Bespoke tracks the relationship between high yield credit spreads and the S&P.  If the widening of these spreads is ...