It’s always nice to see bank stocks leading the market higher… but it doesn’t always work out that way.

Which is why we always let the price action (and patterns) dictate our investment choices.

For most of my career, though, bank stocks have liked rising interest rates.

BUT for the past 2 years, interest rates have risen nearly 5 percent and the all-important

KBW Bank Index (for bank stocks) has declined nearly 50%.

I have not seen this in my 43-year career.

You can see this in today’s chart, where we compare the Bank Index to the 2-Year Treasury Bond Yield.

As you can see, the 2-year yield is testing its 2007 highs.

As this occurs, a couple of questions come to mind… what if interest rates peak here, what will banks do? What if rates breakout, what will banks do???

This dynamic is definitely worth watching. Add it to your trading radar.

(Click on image to enlarge)

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