Like a middle school high jumper, companies are getting plenty of credit this earnings season for clearing very low bars.

While short-lived, yesterday's pullback had purpose. Along with the sideways fade over the past week most of the major indices were able to work off an overbought condition.

Despite the fact that the six major U.S. banks have been on the rise for nearly four months now, their stocks remain risky long-term buys.

The increase in volume was excellent to see yesterday, and that increase in volume added further conviction to the bullish move higher past 1280 resistance.

This week's data may not indicate too much about the U.S. economic recovery, but it was good enough to support bank stocks...

If you're looking for yet another reason to own physical gold, look no further than the unbelievable situation that continues to unravel with the MF Global debacle.

If two of these three trends don't take place, neither will a market rally.
 

The latest rally in the market was initiated with optimism that Europe would come up with a plan, quickly, that increases investor confidence, avoids default and recapitalizes banks.

We knew bank earnings wouldn't be good. Analysts have cut their estimates for Citigroup (NYSE:C) several times over the last month, by an average of about 20%. So maybe it's a good sign that Citi beat expectations handily...

Apparently Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) may both shed their "bank holding company" status to avoid Volcker rule restrictions and get back to the good ol' profitable trading game.

The market slumped lower yesterday and the bulls lost their four day winning streak. Volume was low in the decline, as it has been for most of the week.

Financials were the big losers yesterday; bank stocks, including Bank of America (NYSE:BAC) JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC), Citigroup (NYSE:C), Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS) were all down more than 3%.

For the past year, the fate of commercial real estate in the U.S. has been a popular talking point for economic bears. Something like $1.4 trillion in commercial real estate loans comes due in the next 3 years.   

 

Given that a good portion of these properties are underwater, and the fact that banks are still reluctant to lend, the concern that many of these loans won’t get refinancing seems valid.   

 

Already, we have seen companies simply walk away from properties that are losing money, turning the keys over to the banks that hold the mortgages. Maguire Properties (NYSE:MPG) has done it. And we’ve seen BlackRock (NYSE:BLK) and Tishman Speyer Properties abandon Manhattan’s Stuyvesant Tower when the value fell from $5.4 billion to $2 billion.   

 

For shareholders, these moves make sense because it’s better than throwing good money after bad. For Maguire, it was a matter of life or death for the company.  

 

Still, it’s a concern because someone has to step up and buy the impaired real estate from the banks. Otherwise, bank balance sheets are saddled with even more toxic assets, capital bases fall, lending dries up and the whole financial crisis gets repeated again.  

 

Interestingly, it may be the Chinese who help the U.S. out of this commercial real estate problem.