FACEBOOK AND GOOGLE LEAD COMMUNICATIONS TO ONE OF DAY'S STRONGEST SECTORS -- BOUNCING BOND YIELDS ARE PUSHING TREASURY BOND PRICES LOWER -- BUT HIGH YIELD BONDS ARE RISING

COMMUNICATIONS SPDR HAS STRONG DAY...While healthcare and financials have been leading for most of the day, communication stocks have crept into second place in afternoon trading.   Chart 1 shows the Communication Services SPDR (XLC) bouncing impressively off its 50-day average that it cleared just last week.  It's being led higher today by Internet stocks.

Chart 2 shows the Dow Jones US Internet Index climbing more than 2% today.  It's also rising above a falling trendline drawn over its July/August highs.  Two of its biggest gainers are shown below.

Chart 3 shows Facebook (FB) rising more than 3%.  The stock has cleared its 50-day line and appears headed for a test of its September high.  Chart 4 shows Alphabet (GOOGL) even closer to a test of its September high; and possible upside breakout.

BOND YIELDS ARE BOUNCING...After an early morning pullback, Chart 5 shows the 10-Year Treasury yield trading 3 basis points higher to 1.76% in afternoon trading.  Higher bond yields are supportive to financial stocks, and banks in particular.  Rising bond yields result in lower bond prices which is the case today.   Not all bond prices are dropping however.

TREASURIES AND HIGH-YIELD BONDS TREND IN OPPOSITE DIRECTIONS...The red bars in Chart 6 show the 20+Year Treasury Bond iShares (TLT) falling further below its two tops formed in early September and October.   That normally happens when Treasury yields rise.  The rising green bars, however, show the iBoxx High Yield Corporate Bond iShares (HYG) moving up toward their September high.  That's because the HYG usually tracks stocks more closely than bond prices; and usually does better than Treasury bonds when bond yields are rising along with stock prices.  The combination of falling Treasury prices and stronger high-yield bonds is usually a sign of rising investor confidence.