BANKS ARE STILL ON THE SHORT LIST

Some short-sellers on Wall Street are predicting more pain for financial-sectors stocks - despite the rally some shares posted this week in the wake of second-quarter results.

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"All financials will make new lows, not because of this week's inflated rally, but because we have not factored in the interplay of lower home prices, a slower economy, and we don't have proper marks on assets in our investment banks," said Fleckenstein, who has recently authored a book called "Greenspan's Bubbles."

Mark Hanson, a mortgage consultant with the Field Check Group, who is used by Fleckenstein and an A-list roster of hedge-fund clients who each manage $1 billion to $10 billion in assets, recommended after the banks' earnings reports this week that they rush to call their options broker and load up on puts.