UPSIDE BREAKOUT IN BOND YIELDS IS BOOSTING FINANCIAL STOCKS -- CITIGROUP AND JP MORGAN NEAR UPSIDE BREAKOUTS -- INSURANCE ISHARES HIT SEVEN-MONTH HIGH TO LEAD XLF HIGHER -- PRUDENTIAL AND PRINCIPAL FINANCIAL GROUP ACHIEVE UPSIDE BREAKOUTS
FINANCIALS GET A BOOST FROM RISING BOND YIELDS ... Yesterday's message showed the 10-Year Treasury yield rising to the highest level in four months. That probably explains why financials are leading the market higher today. Chart 1 shows the Financial Sector SPDR (XLF) bouncing sharply off its moving average lines and in position to challenge its August high. Bank stocks are bouncing. Chart 2 shows Citigroup (C) on the verge of an upside breakout, while Chart 3 shows JP Morgan Chase (JPM) on track to a challenge its 2018 highs. The biggest financials gainers, however, are insurance stocks.
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Chart 1
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Chart 2
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Chart 3
INSURANCE STOCKS TAKE THE LEAD ... Insurers also benefit from rising bond yields, and they're certainly doing that today. Chart 4 shows the U.S. Insurance iShares (IAK) breaking out to the highest level in seven months. Two of its biggest percentage gainers are shown below. Chart 5 shows Prudential Financial (PRU) breaking out to the highest level since May. Chart 6 shows Principal Financial Group (PFG) rising above its summer high to achieve an upside breakout as well. Both insurance leaders are nearing a test of their 200-day averages.
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Chart 4
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Chart 5
