Friday, January 10, 2014

TNX 10-Year Treasury Note Yield

The 10-year note yield receives the spank down from the overbot conditions, rising wedge and negative divergence highlighted 7 trading days ago. The yield dropped 10 basis points on the jobs report today. The fractal from September's drop in yields may replay. Back then, yield back kissed the 20-day MA the day after it stabbed down through the 20 and then yield collapsed, plunging to the 50-day MA, then lower. Thus, yield will likely have a recovery move to 2.94% over the next day or two of trading, however, lower yields are expected down to the 50-day MA at 2.81%, and rising, and lower. The short red lines near the right margin for the indicators are all weak and bleak wanting to see lower yields after any bounce would occur. 

Although some areas of the chart, like early November with the big up in yields correspond to lower stocks, in general, the chart follows more of a pattern of higher yields occurring with higher equities and lower yields with lower equities. Money flowing out of stocks tends to find its way to bonds, which drives the bond price higher and yield lower. Money flowing into stocks chasing greater risk and shunning perceived safety, moves out of bonds sending note and bond prices lower and yields higher. Yields topped in early September, and a top in the SPX occurred mid-September about 10-12 days after the top in the 10-year yields. Adapting this behavior to the present day, yield topped 8 days ago, so if the same dealio occurs, the SPX would top and roll over any day forward. The 20-week MA is 2.77% so keep that level in mind moving forward.  Lower yields are surprising everyone considering 95% plus of traders and analysts on Wall Street are all calling for higher yields in 2014. The year should prove eventful. 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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