TNX 10-Year Treasury Note Yield Weekly Chart; Yield Overbot; Rising Wedge; Negative Divergence Developing

The 'reflation' word is bandied about these days. The uber driver said, "Whew, that reinflation sure is something, isn't it?" Nellie, the cafeteria worker that wears the orange hair net, is overheard telling a customer, as she slaps mashed potatoes onto the plate, to "watch out for that nasty ole reflation." Reflation, schmation. Yields should be topping-out in the near future. Inflation is coming but there is still some finishing work to do with yields during the coming weeks first.

Use the TNX weekly chart with the prior two charts. Same-o analysis in play. Bring up the TNX daily and you see universal neggie d across all indicators, yield is ready to pull back now on a daily basis. So that will cause yield to slump over and become soggy for a few days. The neggie d above on the weekly (blue lines) will collude with the daily chart to create the pullback in yield on the daily basis.

However, the MACD line (orange) remains long and strong wanting to see another higher high in yield after a pullback occurs on this weekly basis. Thus, if you marry the daily and weekly charts, yield should slump over now and move lower due to the negative divergence on the daily chart and neggie d on weekly, but after a few days will recover and come back up again to the current highs or a touch higher, say a week or two out, after the move lower due to the daily chart occurs, and when yield comes up for that high, the orange line will turn blue and mark the top with neggie d across all indicators. This will call out the start of a multi-week move lower for yield.

The wild card is that once yields start dropping, which will likely be in concert with stocks falling apart, the MACD line on the weekly chart above may simply slump over and this may be the multi-week top now for the yield (rather than a week or two out).

The stoch's are overbot agreeable to a pullback but the RSI is not. The rising wedge pattern is bearish. That W pattern bottom is say 5 at the bottom and 9 on top which is 4 difference. So 1.30% would be the target if the 0.90% level was breached to the upside which it was.  The 10-year crosses above 1.20% this morning, let's see, it is at 1.181% now. Fed Chairman Powell speaks on Wednesday from the New York Economics Club, perhaps after he warms himself with a brandy, so that will impact rates.

With 1.18% now, watch to see if the spankdown of yield has begun on the daily chart. This would last a few days and probably hold 1.00%, so say a 1.00% to 1.10% landing area in a few days, then back up again to 1.20%-1.30%, say in a week or two or so, and that will be the top on the weekly chart, due to universal neggie d across all chart indicators, and then yield will trail lower for many weeks probably down to 0.90% to test that logical support level. After the breakout in yield, it never showed respect to that 0.90% level with a back test so that would be on the table for, say around mid to late March. 

The TNX monthly chart is up, up and away with yields. Keystone has been describing the potential end to this long-term 3-decade bond bull market (higher prices lower yields) for the last year. These things do not turn on a dime and everything is proceeding about as you would expect. After that drop in yield occurs, due to the neggie d developing and occurring, and a bottom in yield occurs, below 1%, in March, maybe April, that should be it for the bottom side. Yields will begin higher from there on a monthly basis; that March/April period is likely the long-term bottom for yield on the monthly, perhaps multi-year basis.

In the near-term, as described, with yield receiving the spankdown in the daily time frame that would be a TBT short or a TLT long play. Keystone does not hold any of these trades currently. Bring up a TLT 2-hour chart; you can see the bottom wants to form say over the next couple hours. The TBT 2-hour is going to receive the neggie d spankdown and should drop right now going forward a few days. 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.

Note Added 1:58 PM EST: 10-year yield is at 1.15%. Yield has dropped 5 bips over the last 8 hours. That's funny. No one has said the word reflation over the last 8 hours.