"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

Now that the financial news has got everyone excited about the recent rally, the big players on Wall Street welcomed your enthusiasm by taking profits. They like doing things like that. We call this enhanced media excitement, Stock Market Foreplay.

DJIA: 8,409.85, down -102.43 or -1.20%
Nasdaq: 1,716.24 down -42.86 or -2.44%
S&P 500: 907.39 down -12.14 or -1.32%

The big news of the day has to be the upgrade of Bank of America (BAC) to "outperform" at Robert W Baird. They raised their price target on the stock to $18 from $9.

Federal regulators will release the results of stress tests designed to mess with the minds of the CEO's of the 19 leading banks. Bank of America continues to get picked on after CEO Ken Lewis spilled the beans on Paulsen and Bernanke for using strong arm tactics to get the company to buy Merrill Lynch.

Federal Reserve Chairman Ben Bernanke gave a 15 minute speech this morning on the Feds role of monitoring bank liquidity. I tried to listen, but didn't understand a word of it.

The European Central Bank cut interest rates by 0.25% to bring rates to a record low of 1%. Despite the news, Treasury yields continue to climb as China is no longer buying our debt, and the Feds so called "quantitative easing" is slowing.

What is happening is the Chinese isn't funding our debt, and the Federal Reserve will have to step and take up the slack by purchasing up excess Treasury's. Right now you are seeing the effects of this as oil prices continue to rise. Gold and commodity prices are moving higher as well.

Cisco (CSCO) beat earnings and revenue estimates after the close yesterday. Cisco sees product demand stabilizing, and said July quarter sales would be up 2% to 5%.

Going forward, investors that don't get scared during periods of market panic have enjoyed some huge early gains. Given the still low levels of interest rates, consumer discretionary and
financials have historically outperformed the broader market. We have witnessed this over the past 40 days.

On the flip side, defensive sectors such as telecommunication services, utilities, and staples have been least likely to outperform the S&P 500 during the early months of a new bull phase.

Today's sell-off is more than likely a short term timeout rather than a new leg down. The market will not give up that easily, and we will probably go high in the summer months.

What could derail the whole thing is interest rates and inflation. The recent bump up in bond yields should serve as a short across the bow. Longer term, when the Fed and China combined stop funding our debt, interest rates could rise dramatically. High interest rates on government bonds will eventually compete with the returns on stocks. When this begins to happen, it's best to sell stocks, and wait.

The opportunity to sell stocks should come sometime this summer.