Investors managed to keep the rally alive last week despite several key banks being told they had to raise more capital. After the government’s stress test results, 10 of the nation’s 19 biggest banks were told to pony up.

Here's a summary of each bank and how much capital they need to raise;

American Express: none needed
Bank of America: $33.9 billion
BB&T Corporation: none needed
Bank of New York Mellon: none needed
Capital One Financial: none needed
Citigroup: $5.5 billion
Fifth Third Bancorp: $1.1 billion
GMAC: $11.5 billion
Goldman Sachs: none needed
JPMorgan: none needed
KeyCorp: $1.8 billion
MetLife: none needed
Morgan Stanley: $1.8 billion
PNC Financial: $0.6 billion
Regions Financial: $2.5 billion
State Street: none needed
SunTrust Banks: $2.2 billion
U.S. Bancorp: none needed
Wells Fargo: $13.7 billion

In addition to the stress test, the nations unemployment rate hit 8.9%, but the employment report came in better than many had expected.

The current rally is repricing stocks for a recession instead of a depression. The media pounded the airwaves with the dreaded "D" word to keep you from buying stocks. While many investors were running for the exits, I'm sure some very rich (in the know) people were buying at unbelievable prices.

Currently, the stock market is very overbought, and the momentum indicators defined in the Relative Strength (RSI) numbers warrants caution.

Relative Strength (RSI) measures a stock as overbought/ overextended if its RSI is around 70. A stock that is oversold usually has a RSI of around 30. Many stocks today have RSI numbers ranging from the mid 60's to the mid 80's. I am not interested in participating in the buying frenzy when these numbers reach such lofty levels.

Here is a list of on some hot tech names that have extreme overbought RSI numbers;

AAPL= 82.67/ 82.58
RIMM= 78.38/ 79.49
GOOG= 73.28/ 75.34

Traders that own positions in these stocks may want to consider selling or sell puts or covered calls on their positions.

Here are a few overextended Dow stocks;

BA= 75.86/ 64.83
AA= 77.35/67.45
AXP= 75.67/76.79
CAT= 83.62/69.08
DD= 70.60/75.24
DIS= 80.13/71.87
IBM= 73.51/72.34
HPQ= 69.73/68.31
INTC= 73.28/68.61
MMM= 76.25/67.54
T= 72.86/ 63.20
UTX= 73.45/70.82

We took some money off the table last week in preparation for a correction based on the extreme overbought condition. Oil prices continued to climb, and the jury is still out as to why.

Some believe the rally in oil was a direct result of the rally in the stock market. We need to consider other opinions as well. For example, interest rates have been rising, and Treasury auctions are not doing well at all.

Since the Chinese are no longer buying our debt, the Federal Reserve is stepping in to buy up the excess debt. The do this by printing more money which has a negative effect on the dollar, and will eventually be very inflationary.

As the dollar declines, oil prices rise because oil is priced in dollars. When there is less demand for our debt, yields rise. We need to watch this one very closely.

Since April 20th, the UltraShort 20+ Year Treasury ProShares (TBT) has jumped 17.6%. The TBT is a double bear short of the 20+ Year U.S. Treasury index.

Here are our Top 10 ETF's for the week of May 11th:

1) DBA: Powershares DB Agriculture Fund
2) EWZ: Brazil Index
3) DBE: PowerShares DB Energy
4) USO: U.S. Oil Fund
5) IYF: iShares Dow Jones US Financial Sector
6) DDM: Ultra Dow 30 Proshares ETF
7) PGJ: PS Golden Dragon China Fund
8) SSO: ProShares Ultra S&P500 Trust
9) CASH
10) CASH

Here are our Top 10 Fidelity Sector Funds for May 2009

1) FSPTX: Technology Portfolio
2) FSRBX: Banking
3) FSCGX: Industrial Equipment
4) FCYIX: Industrials
5) FSCPX: Consumer Discretionary
6) FSCSX: Computers & Software
7) FSCHX: Chemicals
8) FNARX: Natural Resources
9) FSENX: Energy
10) CASH