Kass: Three Signs That This Will Really Hurt

It ain't over 'til its over -- and it ain't over.

Last week, the market rallied out of the abyss as it has on so many occasions over the past 12 months, as neither rain, snow nor structured finance seems capable of keeping Mr. Market in the doghouse -- and me off of the cold linoleum floor, drinking cheap tequila.

Everybody, it seems, is getting fat in this market, except for Papa Kass.

Later in this article: three reasons we're in for tough sledding. But first, was the financials' rally all it was cracked up to be?

As recently as Thursday, I suggested that an oversold bounce could be in the offing in financials, and bounce they did after Microsoft's(MSFT Quote) stellar results that evening, speculation that Merrill Lynch's(MER Quote) Stanley O'Neal was about to be fired (which proved correct), after Countrywide Financial's(CFC Quote) "upbeat" forecast (which I don't believe for a minute), and probably on the basis of a growing view that the worst of the mortgage writedowns is behind for the financials.

I suspect the short-term rally is not yet over in the money-center banks, as they are still quite oversold; that it is about over for brokerage stocks (Barron's Jackie Doherty presented an excellent summary on the group over the weekend); and that some of the specialty finance companies, such as private mortgage insurers and mortgage originators, have already had most (if not all) of their "fun in the sun" during last week's dead-cat bounce.