On edge

Market reversed on July 15th: Dow touched 10732 and closed the week at 11496. XLF hit low of 16.77 and closed the week at 20.67. Almost all technical indicators show a short term bottom for the market, for the first time in two months, we have a sustained rally off low, and it's not sold.
I am still on edge, since I entered financial stocks too early, yes, I averaged down, but almost ran out of cash on July 15th, and I didn't add, I wanted to have some cash. And financials are almost 23% off the intra-day low now. There are few things to consider before I reduce my financial holdings:

1. SEC's naked short selling rule take effect on Monday, July 21st. No one knows for sure how much is the impact, but considering the strength in financials recent swing, I think this may help bulls since bears are handicapped. FNM, FRE, C, MER, LEH and WFC, these stocks all showed at least 30% move this week, and most were late of the week on the up side. This is sign of a bottom.
2. And oil crashed, since consumers are cutting back drivings. I think this will put a top on oil for the short term, further help bulls case. One of the indicator of oil correction can be seen in airline stocks, UAUA touched low of 3s and now in 5s. That's 60% move from the low in 4 days!
   
3. Learned from last year, I think this rally has some legs and I won't be surprised to see another 5-10% up movement in S&P500 in the next few months. But I will let market tells me what's next and reduce my positions accordingly.
   
4. For XLF, I think first resistance is around 22-23, then the next one is around 26-27. I'll watch market closely and see if this rally is sold off again, or it's bought on dips.
5. XLF and UYG, two financial ETFs, had huge volumes on July 15th, 16th and 17th. I mean huge, 3 times of the standard deviation above mean average. One of the indicator that the bottom in financials is in, for the time being, like two to three months.
6. For now, even though I am on edge, I'll enjoy the rally if it can last for a few days or weeks.