There's no doubt about it, the Financials (XLF) are the darlings of the market, having easily outpaced all nine other sectors on a 1, 3, 6, and 12 month basis. For some, that might be a warning sign that this 80-stock basket of lenders, insurers, REITs, asset managers and investment banks could be getting a little ahead of itself. If you add in today's mixed earnings results which saw Goldman Sachs (GS) nearly tripling profits and easily topping expectations but JPMorgan Chase (JPM) clearing the bar thanks in part to a $900 million reduction in loss reserves, and the outlook for the group as a whole starts to get a little muddled. And then there's the fast-approaching debt ceiling showdown, and the dilemma starts to look worse given the sector's unique vulnerabilities.

"Financials are the most levered to the economy and anything that threatens the economy is certainly going to effect these stocks in the short-term," says bank analyst Anton Schutz, president and CIO of Mendon Capital. Even so, he plans to ''take advantage of the choppiness" in the coming weeks and look past the short-term turbulence.

In the attached video Schutz explains that, for a number of reasons, he is much more confident in long term outlook, pointing out that the sector is valued at "absurdly low multiples."

Still, there are concerns and risks surrounding interest rates, housing, and regulation, the latter of which Schutz describes as still being "incredibly heavy and very costly." But when you eliminate or simply ease that regulatory burden, he and many other bank investors see great opportunity.

Remember green shoots? Those optimistic anecdotes that were flooding the market in 2008 and 2009 concerning every glimmer of hope that the worst recession in 75 years was ending, or at the very least stabilizing?

While those little sprouts ended up getting strangled by relentlessly high unemployment and stubbornly slow growth, the stock market has never really looked back and is set to mark its fourth anniversary, albeit at a time of heightened worry ahead of the fiscal cliff follow up fights I like to call the February follies.

And yet, through this fog of fear, Ryan Detrick, sr. technical strategist at Schaeffer's Investment Research is looking for another 15% this year and is taking comfort in the strength of small caps.

"The small cap leadership is a good sign," Detrick says of their new high and 10-year outperformance. "That's an indicator that potentially sometime later this year, blue chips and the Dow Jones very well might also breakout to new highs."