NEW YORK (Real Money) -- Nothing like the charts to pour over on a cloudy weekend, where you can look with care at each pictograph and make some decisions about what's really happening and what isn't.
Let me give you some observations from this mountainous perusal.
First, despite the inability of the 10-year to punch through 2.4%, the financials, which need higher rates like California needs rain, are flying. They are the best charts in the book and are almost all in breakout mode.
There are big banks that look terrific, like Bank of New York (BK - Get Report), JPMorgan (JPM - Get Report) and PNC (PNC - Get Report). There are regionals that seem irrepressible, namely, Key (KEY - Get Report), First Horizon (FHN - Get Report), Fifth Third (FITB - Get Report), Huntington (HBAN - Get Report) and Synovus (SNV - Get Report). Both of these segments would not be going up if comparisons were getting harder. In fact, you could craft a thesis that all investors might care about is the end to net interest margin compression and we will begin to lap easier comparisons, so that's certainly possible.
There aren't many insurers that look all that special, with AIG (AIG - Get Report) leading the list. The brokers seem incredibly strong, especially Schwab (SCHW - Get Report) and E*Trade (ETFC - Get Report). They, too, react to higher rates and I find their strength a little more puzzling than the banks', because it isn't like people are beating down the doors to trade stocks. Intercontinental (ICE - Get Report) retains its luster as a brutal consolidator. What a stock! The hybrid that is Northern Trust (NTRS - Get Report) acts incredibly well, too.
Given what John Stumpf, CEO of Wells Fargo (WFC - Get Report) calls this a "muted" housing recovery, I was surprised to see so many mortgage insurers in the breakout stage, namely Radian (RDN - Get Report), MGIC (MTG - Get Report) and MBIA (MBI - Get Report). I always thought it was incredible that the latter two survived at all. Radian remains an excellent company. Perhaps this resurgence simply comes because the Feds are pulling out of the insurance business.
Of course, the chicken way to play financials never seems to go out of style. The usual credit card companies, Capital One (COF - Get Report), MasterCard (MA - Get Report) and Visa (V - Get Report), are strong. Portfolio managers have hidden in these three for years. American Express (AXP - Get Report), even after that big buyback and Discover (DFS - Get Report), don't seem to be tempting at all.
Lots of ancillary fins just keep going higher. Outsourcers like DST (DST), Fiserv (FISV - Get Report), Equifax (EFX - Get Report) always seem to be on the plus side, the latter kind of a total perennial.
I could go on and on with the love shown to this group, including stocks like McGraw Hill (MHFI), Intuit (INTU - Get Report) and Morningstar (MORN - Get Report), but the real point is that this whole sector is not only strong, it is by far the strongest, as people keep positioning themselves for the inevitable move higher in rates.
Posted on Real Money at 5:53 a.m. EDT on Monday, May 18, 2015
Editor's note: This is part 1 of 2. Click here for part 2.