TNX 10-Year Treasury Note Yield Daily Charts Channel 6-Year Trend Line Overbot Rising Wedge Negative Divergence Yield Extension Above MA's

The 10-year note yield is a major focus of investors these days. Higher yields may hurt housing. Higher yields will hurt interest-rate sensitive stocks such as telecom and utilities. A larger spread between the 2's and 10's will benefit the banks. Keystone uses a 2-10 spread of 255 as a signal for happy bankers and the yields are testing this area (2.92% - 0.38% = 254 bips). What happens next? The TNX chart from a few days ago highlighted the negative divergence which only caused a minor one-day pull back and at this writing the yield pops upwards to 2.92% (red dot). The negative divergence remains, as well as overbot stochastics, and the rising wedge pattern, all are bearish indications. The brown dots show the price extension above the 20 MA above the 50 MA above the 200 MA where a reversion to the mean is now required. A move lower to 2.2%-2.7% is on the table.

The multi-year daily chart shows the downward-sloping channel in place with yield now testing the top trend line, a very important inflection point. Bounce, or die. The red lines highlight the negative divergence so a rejection would be expected in this area. The dark blue dots show the three prior times, since the financial crisis in 2008, where yield was highly elevated above the 200 MA. The 2009 drop was from 4.0% to 2.3% in 10 months time. The second is a drop in 2011 from 3.7% to 1.4% in about 16 months. The most recent reversion to the mean was a move from the 2.2% spring top to 1.6% in May in about 3 months. Projection is for yields to drop from here. The MACD line has a touch more upside juice for yields so one more stutter-step jog move may be on tap, down to the 2.8's, then back up to the 2.9's, then roll over for lower yields moving forward. Keystone opened a position in TLT which is the bond ETF that will move up if yields drop but will fall lower if yields continue higher. TBT is the ETF that moves up with yields moving up and down with yields moving down. The 10-year yield hits 2.94% this morning and pulls back to 2.89% as this missive is typed. 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.