TNX 10-Year Treasury Note Yield Weekly Chart

Pundits are parading across television screens proclaiming 1% on the 10-year. Interestingly, they are all the same Einstein's that called for the 10-year yield to run to 4% in late 2013. At the end of 2013, Keystone pointed out the negative divergence in the chart and a smack down from 3% which was the complete opposite of 90% of the punditry's forecasts. It is not rocket science. The red lines show the neggie d and yield received the spank down back then as expected.

So, with all the noise now from analysts and market participants that 1% on the 10-year is guaranteed, that indicates that it may not occur; the consensus is typically wrong. Can the 1% occur somewhere down the road? Sure. Especially if a deflationary spiral develops. Global traders may seek the perceived safety of Treasuries and drive the yield under 1% but that outcome is probably not likely at least through the intermediate term (several months).

The green lines show the positive divergence in play now that will want to bounce yield (remember, higher yields reflect lower prices, in other words, traders shun notes and bonds so price drops and yield rises). The RSI and stochastics are drifting lower this year which may place the yield in a stuttering sideways move for another month but the expectation is for basing and a move higher in yields going forward. The 1% crowd will likely be disappointed.

The RSI and stochastics are oversold hinting that a basing is currently taking place for yield. There is a spaghetti of lines on the chart but note the positive divergence in the indicators over the last 5 years (thin green lines). Yield came down to test the 2012 lows and the indicators were not as weak hinting that yields will recover going forward. Yield punctured the lower standard deviation band (pink) so the middle band at 1.72% is definitely in play as an upside target and also the upper band at 2.03% with both of these targets trending lower (the targets will drop as the days and next couple weeks play out).

The neon circles for the ADX show when the strong trends occur. The strong trend lower in yields in 2011 into 2012 ended in the summer time 2012 and yields reversed and moved higher. The uptrend in yields was strong in late 2013 but the neggie d on the chart told you that that parabolic rise in yields was going to end abruptly, and it did. The strong trend higher in yields ended as 2014 began. The only other strong trend was in early 2015 when yields were rising but that petered out in the springtime in 2015.

Over the last year, the ADX remains under the low 20's indicating that there is no strong trend in place for this trend lower in yields. This hints that yields will recover going forward and the prognosticators looking for a 1% yield in the near-term receive a few more slaps to the face. Slap, slap. If the downtrend in the 10-year yield was strong and heading towards 1% the ADX should be above 30 running towards 40; it's not.

Mixing all this mumbo-jumbo together and sprinkling on some magic dust, the projection would be for yields to move through the unexciting 1.55%-1.90% range for the weeks and months ahead. 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.