Last night in The Closer we showed that S&P 500 Banks have been underperforming the market relative to the level of short-term yields and the shape of the UST curve. In addition to that analysis for the group as a whole, we also identified 4 charts with constructive patterns which look likely to outperform.
First, JP Morgan (JPM) is in the process of forming a multi-month cup-and-handle. While the stock has not yet broken out, the set-up has potential. SunTrust (STI) has already broken out from a similar formation and is leading the group higher. PNC Financial (PNC) and M&T Bank (MTB) have already broken out of downtrends, but are much further below recent highs. While these patterns are all somewhat different, they all suggest good things ahead for banks, in addition to the positive signal from interest rates.
(Click on image to enlarge)
