TNX 10-Year Treasury Note Yield Daily Chart; Double-Top (M-Top) in Progress; Overbot; Negative Divergence Developing

You can work this daily chart of the US 10-year yield with the previous weekly chart that is topping out and looking for a multi-week pullback in yield. The US Monthly Jobs Report on Friday is a bit better than expected so the worries, opining and hand-wringing about inflation continue. Traders and investors realize that the Federal Reserve will continue hiking rates until they break the economy sending it into recession so they are gittin' outta Dodge selling both notes and bonds (lower price higher yield) and stocks.

The three white candlesticks tell the upside story in yields last week. A Tweezer Bottom occurs on Monday and Tuesday at 3.56% and yield shoots higher to 3.91% ending at 3.88%. That is 35 bips (basis points; hundreths of a percent) of upside within 4 days. Crazy, crazy markets and Jerome Powell is the Mad Hatter.

The chart shows yield coming up for a double-top, or M-top if you prefer. Looking at the prior top in yield at 3.99% on 9/27/22, call it 4%, and then the retreat, it occurs from the negative divergence on the RSI, stochastics and ROC as well as the overbot conditions in the RSI and stoch's (note that overbot pertains to the yield so it is actually notes and bonds sold off to the point that the yield moves into that high territory; it is odd since charts typically display price not yield). Anyhoo, now that you are sufficiently confused.....

The blue lines show neggie d across all indicators for the prior top except for the MACD, and the histogram had a hair of momo, too. This tells you that yield will be spanked down on the daily basis due to the neggie d but since the negative slope is not in play across all indicators, yield will likely want to come back up again to print a matching or higher high and, at that time, the MACD will likely go neggie d, joining the other indicators, and the top will be in on the daily basis.

Watch the indicators as yield moves higher. When yield prints the matching high compared to the last top, if it does, the indicators can be assessed for neggie d and all will likely be ready to smack yield lower on the daily basis. Simply watch the thin blue lines in the right margin in the days ahead. As yield rises, as long as the indicators do not move above the thin blue lines, yield is printing its top on the daily basis. Easy peasy.

Yield violated the upper standard deviation band so a move back to the middle band at 3.65% was on the table, and it occurred with the Tweezer Bottom and yield recovers for last week's  upside orgy. The prior top in yields is 3.96% to 4.00% so any yield in this range is enough to kick in the neggie d and call the top. If you are bullish on bonds and want note and bond prices to run higher and yields lower, you would already be in clover if yield would have closed only 8 bips higher at 3.96%.

The upper standard deviation band is now at 4% so that is on the table for the upside in yield. The daily chart is weak showing that yield is taking its last breaths to the upside on the daily basis. Of course, the constant caveat is any Fed news and there has been a lot of it these days.

Once the daily tops out, which will likely be early in the week ahead, anywhere in the 3.88% to 4.03% range, the downside in yields begins on the daily basis and it will likely kick in the extended downside expected in yields on the weekly chart (a few weeks of lower yields ahead). What's this yahoo talking about? Everyone on Wall Street says yields are heading higher and higher without delay. Who's this Keystone character? He probably does not know shine from shinola.

Keystone is not playing in this arena right now but the play going forward would be long TLT and short TBT. 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 Monday Morning, 10/10/22, at 10:25 AM EST: Bonds are not trading today due to the Columbus Day holiday. 10-year yield 3.888%. USD 113.15.