Don't Ignore This Chart!

Yields Soar, Banks Explode Higher

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The stubbornness of treasury buyers has kept a lid on treasury yields and, as a result, banks ($DJUSBK) have struggled to determine which direction they should move.  Well.....this morning's reaction to an upwardly-revised GDP number (TNX up 7 basis points to 2.29% at last check) for the first quarter and the Fed's decision to lift restrictions on banks paying dividends and buying back shares seems to have resolved that issue.  The 10 year treasury yield ($TNX) is having its biggest spike in a few months and banks are benefiting.  Check out this chart:

That's a serious jump in banks and, barring a major reversal later today in both the DJUSBK and TNX, I'd look for further gains in banks this summer now.  Also, the 2.30% level has been a key pivot level in the past on the TNX and there's bullish wedge resistance at that level as well.  Therefore, view a break above 2.30% as a major upside breakout, further adding to bullishness in banks and life insurance companies ($DJUSIL).

Happy trading!

Tom

Tom Bowley
About the author: is the Chief Market Strategist at EarningsBeats.com, where he provides stock market education, guidance, and trading strategies using a unique combination of technical, fundamental, and historical analysis. Tom provides EarningsBeats.com members with four portfolios (Model, Aggressive, Income, and Value), all designed to beat the benchmark S&P 500, and a revolving Watch List of hundreds of companies reporting strong quarterly earnings (must beat both revenue and EPS estimates) and exhibiting technical strength as well. These companies comprise EarningsBeats' annotated Strong Earnings ChartList (SECL), from which Tom trades exclusively. Tom writes a Daily Market Report (DMR) for members to include an executive summary, market outlook, sector/industry watch, and trading ideas. Learn More
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