The decline in the 10-yr yield is not the only factor at work in the markets, but there is clearly a correlation at work recently, especially with banks. The chart below shows the 10-yr Yield ($TNX) and Regional Bank ETF (KRE) falling from mid May to July. Meanwhile, the Technology SPDR (XLK) advanced sharply during this timeframe.
The 10-yr yield and KRE are testing their rising 200-day SMAs and both have falling channels working. A channel breakout in the 10-yr yield would put a different dynamic at work in the markets and this could be bullish for banks. I would not consider this outright bearish for tech-related ETFs, but such a signal could kick off another rotation within the stock market.
As the name suggests, TrendInvestorPro specializes in trend identification and finding short-term bullish setups within the bigger uptrend. We constantly monitor a core ETF list with over 120 names and regularly update trend signals. Click here to subscribe and get immediate access to our reports and videos.
---------------------------------------------
Choose a Strategy, Develop a Plan and Follow a Process
Arthur Hill, CMT
Chief Technical Strategist, TrendInvestorPro.com
Author, Define the Trend and Trade the Trend
Want to stay up to date with Arthur's latest market insights?
– Follow @ArthurHill on Twitter
