TNX 10-Year Treasury Note Yield Weekly Chart Oversold Positive Divergence Quantitative Easing Occurs at Lows

The 10-year yield shows how quantitative easing takes place at the low yields. Low yields signal deflationary pressures, thus, a window is open now for QE and will likely take the form of a coordinated intervention with Japan potentially leading with currency intervention, followed by QE3, LTRO3, China stimulus and even stimulus from emerging nations. This is the kitchen sink approach, all hands on deck, all or nothing, throw the money from the helicopters one last time, and hope for the best. Not exactly the strategy one would expect from the central bankers but they have created their own bed to sleep in now. The bright side is that the money printing QE programs will provide a happy summer, sunshine, beaches, a market rally, but the cold winds will blow early and often once Labor Day approaches.

Placing the QE talk to the side, the chart above clearly shows two multi-year downward-sloping channels in place; the red lines and the steeper drop with the black lines. Look at how the yield sits exactly at the confluence of the two bottom rails. In addition the lower low in price comes with universal positive divergence across all indicators. The indicators are oversold as well so all these factors add up to bounce in yield on tap at any time now. 1.80% serves as sturdy resistance above. Projection is for a recovery in yield now back up to 1.6-1.7%.  If QE3 is announced as the black boxes would project to occur now, yield will jump higher to test 1.80% in short order and then move higher from there perhaps adopting a 1.80-2.30% range moving forward. This information is for edcuational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.