I think before you start yelling bull or bear with the banking...

I think before you start yelling bull or bear with the banking sector you have to analyse pramatically why they have outperformed in the last 6 mths.

1) The insto's have used them as clayton's bonds in the present low interest enviroment.They are high yielding, usually supported by buybacks and seen as safe. (They are 'parking' money here until interest rates rise.) The insto's are all overweight.
2) A lot of recent gains are a function of offshore support. Two reasons here ;
a) Offshore funds have 'discovered' Australian banks at the expense of Asian re index weightings.
b) Offshore funds using Australian banks in same way as domestic insto's to park money as per point 1 and also see Australian banks as a safe currency play re weakness in USD.
3) Percieved increasing profitability re lower transaction costs due to internet.

FOR;
USD will continue to depreciate.
Profitability re low transaction costs will also continue. (Although Felsy's might bring the party to an end re fees.)
AGAINST;
USD will continue to depreciate.
ie. Emotional factor, if DOW continues to crumble nothing is safe.
WILDCARD;
Interest rates.The moment they are percieved to have bottomed and are beginning to rise, 'parked' money will move to bonds.

My Suggestion;
Take profits now and reenter at lower levels IF interest rate outlook is same as present. ie bottomed BUT not going up therefore will still have potential to act as carparks in lieu of bonds.
IF banks do fall and interest rates are percieved to be rising LOOK elsewhere.

Rob.