TNX 10-Year Treasury Note Yield Daily Chart Sideways Channel Negative Divergence Inverted H&S

The 10-year yield is monitored more closely these days than the ladies on the beach in summertime. Yield tags 2.80% with many traders continuing to believe in the QE tapering bond-smashing move coming where yields will jump violently higher. Keystone continues to not ride on this band wagon and instead expects sideways Treasury yields for months, perhaps years, forward. The red rising wedge, overbot conditions and negative divergence spanks yield down from the 3% top 3 months ago. Then the yields pop off the bottom with the green positive divergence and oversold stochastics, however, the RSI never became oversold making the bottom in yields a bit cheesy one month ago. 2 weeks ago the chart shows how yield printed a higher number but the indicators were negatively diverged creating the spank down. Yield recovers again in recent days to print the 2.80% now and the indicators remain negatively diverged, so a flattening of yields and sideways stumble is anticipated moving forward.

The light blue lines show an inverted H&S pattern. Keystone prefers to only use the inverted H&S's after a stock or index has sold off substantially not when the chart is elevated like this one. Nonetheless, the pattern is highlighted with head at 2.5% and neck line at 2.8% which would target 3.1% if yield does punch higher above 2.8% over the next few days. The brown lines show an ongoing sideways channel through 2.5%-3.0% for the last 6 months. Projection is for yields to simply stagger sideways going forward. Traders expect an explosion higher once the QE tapering is announced, however, this scenario is the grand consensus, even the paper boy this morning said that is what he expects. No one entertains the thought that the central bankers obscene actions may actually become exposed as no longer helpful and in fact hurtful moving forward.

There is universal consensus that the stock market will move higher until QE tapering begins and at that point the yields will leap higher and stocks will drop. This is why the equity markets remain elevated currently, purely liquidity-driven by the central bankers, and traders are completely trained like Pavlov's dog to stay long equities until the QE tapering is confirmed. The consensus is typically wrong. Perhaps yields move sideways for the foreseeable future as the central bankers continue the money-printing programs indefinitely since they have no other choice (they would have to admit failure otherwise). At an important market juncture like now, where equities may be printing a multi-year top, watch out for the geopolitical event out of left field. A negative global event would cause traders to run to Treasuries as a safe haven thereby keeping yields low as well. 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.