Market May Bounce Monday led by Financials

The government seized control of Fannie and Freddie to try and stem the tide of mortgage defaults, writedowns, and failings in the Financials sector. It remains to be seen what the U.S. government can do to prevent further damage to the companies, but it is significant that the government is at least creating the image of stability in the Housing and Financial sector.

Asian stocks have made the biggest jump in eight months on the news, and U.S. stock futures are up as well. As long as Hurricane Ike doesn't throw water on the Hammers from Friday, then the Dow could rally to at least 11,350 on a bounce. The SPX could take a shot at 1,260, and the Naz might reach for 2,285. If the Naz jumps as far as 2,300 on heavy volume then the index could rally as far as 2,350, but for now that scenario seems unlikely.

Look for Financial stocks to lead the way early in the day, and if Ike doesn't spike oil, then Retail, Consumer Spending, Cyclical, and Transportation sectors might make a push has well. There aren't any key Economic or Earnings Reports on Monday or Tuesday, so Financials and Hurricanes will probably dominate the news for the next couple of days.

Here is a list of interesting potential Bullish plays on Monday and Tuesday:

Financials: ICE, STI, PRU, PNC, RKH, JPM, MET, MS, MTB

Electronics/Alternative Energy: STP, SPWR

Retail: JCP, URBN, WMT

Defense: RTN, LMT, NOC

Food & Beverage: GIS

Railroads: BNI, UNP

Note possible bottoming starting: Chemicals: TRA, POT, AGU, MOS Energy: NFX, DO, RRC Coal: WLT, CNX

I'm not looking to get all giddy about calls Monday, but I think - barring an Ike spike or a news bogey - that the market will bounce Monday morning and perhaps into Tuesday. And I will be most focused on Financials for short call swings. We'll see what the new day brings.....