This year has brought investors some unique "problems." With everything seemingly moving up and to the right in 2017, it's been hard to keep track of which corners of the market are actually worth paying attention to.
For instance, while the big Financial Select Sector SPDR ETF (XLF) is up a whopping 20% on a total returns basis in the last 12 months, it's actually more or less middle-of-the-pack compared to other leading market sectors.
Thing is, overlooking the financial sector right now could be a big mistake. The big banks are teetering on the verge of breakout territory this December -- and with buyers clearly in control of the price action here, shares could charge into 2018 in rally-mode.
To figure out which banks are breaking higher, and how to trade them, we're turning to the charts for a technical look.
Up first on the list of financial breakouts is Bank of America Corp. (BAC) :
BofA has been a serial outperformer in 2017, charging more than 35% higher on a total returns basis since the calendar flipped to January. But this stock's price trajectory isn't showing any signs of slowing down this winter -- in fact, Bank of America is in breakout mode this week, as shares test a key price level.
In the very short term, BofA has been forming a pretty textbook example of an ascending triangle pattern since the calendar flipped to December. That price pattern is formed by horizontal resistance up above shares, with uptrending support to the downside. The buy signal came on BAC's breakout through its prior price ceiling at $29.50 -- with that price level in the rearview mirror (and successfully surviving a retest of that level so far in Wednesday's trading session), there's ample reason to expect more upside in this big stock.
A similar setup is in play right now in shares of JPMorgan Chase (JPM) -- the key difference here is that the price setup isn't quite as far along:
Like Bank of America, JPM has been forming a pretty textbook example of an ascending triangle pattern since December, a price pattern that triggers a buy with a push through resistance up at $108. JPM hasn't managed to make that move quite yet -- shares are currently sitting just below $108 as of this writing. But a breakout through that line in the sand is a signal that buyers are definitively in control of shares (and that it's time to join them).
Now for something completely different...
Shares of Wells Fargo & Co. (WFC) started off the year as the worst of the big banks. But that didn't last long. In fact, a textbook reversal setup was signaling upside as far back as the beginning of November.
Since then, shares have charged to new all-time highs. But there could be even more upside ahead -- the minimum measuring objective for the bullish price setup that triggered back in November puts a price target in Wells Fargo up at $65.
Simply put, this is another banking stock where buyers are clearly in control of the price action this winter, and the price trajectory isn't showing any signs of slowing down.
Bank of America, JPMorgan and Wells Fargo are the three strongest technical setups in the banking business right now -- and they could propel your portfolio higher as we round the corner to 2018.
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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.