Wednesday, May 22, 2013

TNX 10-Year Treasury Note Yield Daily Chart Overbot Rising Wedge Negative Divergence

The yields have taken a roller coaster ride down in March and April in concert with the equity indexes selling off. The purple circles show the SPX to in mid-April and bottom at the end of April. Then yields jump vertically from 1.64% to 2.00%, 36 basis points in only 13 days, moving up about 3 bips per day.  The falling green wedge, oversold conditions and positive divergence in April identified the bottom in yields.  Now yields are printing higher highs but negative divergence is in place. The RSI barely touched overbot territory but that is in line with the yield behavior over the last few months. The MACD line appears to be leveling off and rolling over with negative divergence but it may have just enough oomph to squeeze out another yield run at 2%.

Note the golden cross in January (50-day MA moves above the 200-day MA) that signaled higher yields ahead and thus, higher equities. The 50 is coming down for a black death cross but the recent stick-save has managed to move the 50-day MA sideways to avoid the negative cross, so far. Projection is either one more test towards 2% then roll over to the downside, or, a move to the downside from here. Down yields (higher Treasury prices) = down stock market. Up yields (lower prices) = up stock market. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

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