Trading Nation

This bank is about to break out: Trader

Financial stocks are going higher: Trader

It's been money in the banks this year, with the S&P financials up 2.5 percent year to date. And a trader who relies heavily on the options market to make his moves says there's one bank in particular that's set to break out.

"The stock I want to be trading on this is Wells Fargo," Todd Gordon said Thursday on CNBC's "Trading Nation."

According to Gordon, Wells Fargo should benefit from what he sees as a constructive environment for the banks.

"Financials are playing very well with bond yields and we see both bond yields and financials moving higher," he said.

Gordon's chart work shows the XLF, the ETF that tracks financial stocks, has moved in step with bond yields throughout the year. However, he said financials have recently started to gain more ground.

"You'll see that bond yields have been moving a little bit lower to flat as the financials have been moving higher, creating a divergence," Gordon said. "The financials are foretelling higher interest rates. I think this is an example of stocks actually leading the bond market."

Gordon sees Wells Fargo going to $60 by September, which corresponds to an upward trend from $54 in April to about $58 in July.

Wells Fargo shares are up more than 6 percent for the year.

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