TNX 10-Year Treasury Note Yield Monthly Chart; Oversold; Positive Divergence Developing; Lower Band Violation; 3-Decade-Plus Note and Bond Rally is in Final Throes

After 3-plus decades, the bond rally is finally fizzling out and in its final throes. The 10-year yield has been bumping along the bottom at 1.4%-1.5% since 2012; that is 8 years of basing so far. How much longer?

Yield is not yet down to the lows from last August-September, thus, positive divergence cannot exist. You have to see a lower low in yield first to then see if possie d is in play.In addition, the MACD line remains weak and bleak wanting a lower low in yield. The ADX purple box shows that the trend lower in yield is a strong trend lower which reinforces the idea that the lower low in yield will occur. Interestingly, lower yields will likely occur as the stock market falls apart; money leaves stocks and seeks a perceived safe haven such as Treasuries so note and bond prices move higher and higher and their corresponding yields move lower and lower.

The other indicators are sloping higher ready to be called positive divergence once the yield makes a lower low than August-September. You will know if the 30+ year bond rally is over or not by the MACD line. It is trying to flatten so when yield comes down for the lower low, it may be possie d. You have to wait and see. If it is, the bottom is in and a new long-term Treasury bear market (note and bond prices lower yields higher) environment begins.

What may occur is that yield comes back down for that current February candlestick but the MACD is still sloping down weak and bleak. That will create the need for another jog move where yield will bounce strongly higher because of the possie d in the other indicators, but then roll over again to come down for a matching low. at that time, the MACD will be possie d and the bottom is in; we are only talking a couple extra months.

As market and economic conditions likely deteriorate this year, yields will favor a lower move due to the flight to safety, however, investors, traders and the Wall Street crowd will be very surprised that yields do not move wildly lower. The brown line is 1.42% and the blue line is 1.34%. The expectation would be to not breach these levels. They may be touched intramonth like the prior years but this long-term basing pattern should hold.

What is fascinating is that, as we slip into recession this year, the yields will likely hold pat and then begin rising. The chart above says yields will bottom, on a multi-month and multi-year basis, between now and May. Yields will be rising in the back half of this year. Of course, the entire outcome of this mess, created by the Fed and other central bankers over the last 11 years, is comically depending on the Fed. The drug addict keeps going back to the dealer to get a fix until one day he finds out the dealer is dead. These are epic and historic market times that will be written about and discussed for decades to come.

Keystone is not playing in this arena right now. The above discussion opens the door to a TLT short trade going forward but it depends on how nimble a trader you are. TLT will likely become soggy and drop for the next few weeks but it will recover and come back up to another matching high a month or two ahead. At that time, the monthly chart will top out for TLT and it can be shorted for the remainder of the year. TBT is the opposite of TLT so TBT will bounce for a few weeks, then become a bit soggy again, but then by springtime or so, TBT will be a long for the remainder of the year. It is probably best to sit out the trades until the TLT tops-out, and the TBT bottoms-out, probably in March-April, then play TBT long and TLT short from there. Of course, watch the central banks since they can immediately change the game. 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.