“Also, a steepening of the yield curve (10-year Treasury yields minus 2-year Treasury yields) tends to coincide with stronger relative price performance for the BKX vs. the S&P 500,” added Suttmeier.
If the KBW Bank Index does in fact breakout, Suttmeier likes J.P. Morgan Chase (NYSE: JPM), Wells Fargo (NYSE: WFC) and Citigroup (NYSE: C) “the best in the group as they’ve all consolidated, held important support levels and are set-up to go,” according to Brown.
Those stocks combine for nearly a quarter of KBWB’s weight. As of the end of the third quarter, the KBW Bank Index was slightly ahead of the S&P Financials Index, according to PowerShares data.
KBWB Top-10 Holdings
Chart Courtesy: BAML via Reformed Broker
