THE FINANCIALS JUST "BROKE OUT"

The latest on the "war of the financials." The XLF just staged an "upside breakout"... and the bulls are in the driver's seat.

About a month ago, we noted how our colleague Jeff Clark expected the financial sector to head lower in the next few months. We also noted how several bright, "big money" investors like John Paulson and Bruce Berkowitz expect the sector to head higher. We pointed out we would know which camp was right when the big financials fund (XLF) moved out of its six-month-long price base in either direction.

As you can see from today's chart, the market says the bulls are right for now. Like copper, XLF recently surged to a new 52-week high. And at $16 per share, this collection of big financial companies is well out of its six-month base.

For traders, this breakout is a sign to go long the sector. You see, for better or worse, the government's giant E-Z-Credit "goosing" has nearly every asset floating on an ocean of cheap credit. As master investor Jim Rogers reminds us, this E-Z-Credit solution to the 2008 credit crisis is a lot like Tiger Woods deciding the solution to his marital problems is to get a few more girlfriends. But it is what it is... and the trend is now UP.