Don't Ignore This Chart!

Rising Treasury Yields Signal Two Things


There's a renewed selling effort in U.S. treasuries and that's sending yields soaring.  Bullish performance in small caps, transportation stocks (especially railroads), financials, industrials and consumer discretionary are painting a picture of a strengthening economy ahead and the selling of treasuries would certainly support that theory.  With the FOMC meeting less than two weeks away, it's apparent that the bond market is anticipating another rate hike at the conclusion of the meeting.  Traders are also pouring into financial stocks, particularly banks ($DJUSBK), as yields rise:

The breakout of the continuation symmetrical triangle pattern suggests we'll see further increases in the yield as we approach the FOMC meeting and with those higher treasury yields, I'd look for more money rotating into financial stocks.  The positive correlation between the 10 year treasury yield ($TNX) and the direction of bank stocks is rather obvious and I'd expect it to continue into December.

Happy trading!


Tom Bowley
About the author: is the Chief Market Strategist at, where he provides stock market education, guidance, and trading strategies using a unique combination of technical, fundamental, and historical analysis. Tom provides 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
Subscribe to Don't Ignore This Chart! to be notified whenever a new post is added to this blog!
comments powered by Disqus