Thursday, December 19, 2013

FVX 5-Year Treasury Note Yield Sideways Channel

The short end of the yield curve, 2's and 5's are moving higher in recent days which may cause Chairman Bernanke to raise an eyebrow. The green channel is in play and the indicators are long and strong wanting another higher yield after any pull back occurs. The histogram is not impressed with the move higher in yield. The positive divergence bounce occurred in late October. The 5-year yield may favor a move through the brown channel for the weeks ahead through 1.30%-1.75%. Trouble would occur in the markets if the yield breaks up through the 1.80% top since it would indicate the Fed has lost control. The blue bull flag targets 2.40% in the future. The bull flag would not be in play unless yield moves above the 1.80%.

The projection is a move through 1.55%-1.75% for the next couple weeks, yield may tease the 1.80%, but the expectation is for a move through the brown channel for the weeks ahead taking things into early 2014. The chart can be reassessed then but the expectation would be a flat move through 2014 with yield probably leaking lower over time to the bottom half of the brown channel. In the near-term, the 5-year yield should remain buoyant. 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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