So with that said, let’s take a gander at some weekly charts.

Two things stand out looking at this chart. First, there is a pretty clear head-and-shoulders-type pattern that played out for the Dow over most of 2007. Second, there appears to be a psychological battleground at the 13,000 level, due to the number itself and the shape of the head-and-shoulders pattern.

For the record, some traders put more faith in pattern formations — head-and-shoulders, wedge, pennant, flag, etc. — than others. I’m not a huge believer in patterns, as I don’t see a chart as anything more than one simple abstract history of what’s happened in the past. But the pattern labels can be useful in discussion.

Notice anything interesting here? While the overall Dow is struggling, the transports have made it back to multiyear highs (all-time highs, in fact).

Without getting too complicated, what does a simple thing like this tell us? It tells us that we are still very much in the era of “stuff” being important.

By “stuff,” I mean commodities, raw materials, hard assets, and so on. “Stuff” stands in contrast to “paper,” which represents all the fancy wizardry the banks have gotten up to these past few years. (A mortgage security doesn’t hurt when you drop it on your foot.) The strength of the Dow transports speaks to the rise of “stuff” because, well, that’s what gets transported.

Here we have the Philly Bank Index, standing in as the polar opposite of “stuff.” This chart looked good for pretty much all of 2006; then, in 2007, it fell off a cliff.

Notice, too, the way the volatility of the bank index has increased dramatically in 2008. You can see that in the way the bars have gotten taller and wilder. Charts for RKH (the regional bank ETF) and XLF (the financials SPDR) look much the same. The big picture for the financials has turned into a giant hairball… and to me, the idea of going long financials at this point has about as much appeal as tucking into a bowl of hairballs.

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