TNX 10-Year Treasury Note Yield Weekly Chart; Overbot; Negative Divergence; Hanging Man; Yields Topping-Out Despite Everyone and His Brother Saying Otherwise

The TNX 10-year yield weekly chart above says the top is in for yields, on the weekly basis. What!? You're wrong! Everyone on television and the internet say yields will continue higher forever. You must be smokin' something! Typically, when the boat is fully loaded to one side, in this case everyone expecting higher yields, it is not the place to be.

But no need to guess. Let the charts guide the way. Yield comes up for the matching high last week printing a hanging man candlestick (bearish). The matching high comes with the chart indicators negatively diverged over the last year. The chart is also neggie d from peak to peak over the last 4 months, however, the MACD line has some long and strong fumes left in the gas tank.

Yields may fluctuate at the current levels for a few days even week or so (to satisfy the MACD) but the chart says down in yields going forward on the weekly basis. Of course, a wild card is in play in the days ahead and that is the Federal Reserve. Pope Powell will either kick-in the neggie d action and yields will plummet, or, happy talk will maintain buoyancy in yields for a few more days after his hump day talk, and then the weakness in the chart will exert its influence.

The progress of the chart can be checked as the new week of trading begins to see how the indicators are lining up. As yields begin the neggie d spankdown, that means traders and investors will be buying paper with both fists (yields down so prices in notes and bonds would be moving higher).

Taking it a step further, traders will likely be buying notes and bonds with both hands as they flee the stock market like rats jumping from a sinking ship. The next few weeks should be lots of fun. September and October are not the best months for stocks and if folks are hitting the sell button on equities some of that dough will be going into the perceived safety of Treasuries sending yields lower. Keystone does not hold any positions long or short notes and bonds right now but does have ongoing shorts on the US stock market. 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 9/20/23, Wednesday Evening, at 7:06 PM EST: Fed Chairman Powell delivers the goods today; no hike but one is still on the table for one of the last two meetings of the year. The 10-year yield jumps higher to 4.41% now at 4.40%. Maybe a day or two is needed to absorb the Fed decision but the above analysis and forecast remains in play; yields should go into retreat as investors seek the perceived safety of Treasuries.

Note Added 9/23/23, Saturday: TNX 4.44%. The 10-year yield pops to 4.50% in all the central banker excitement last week. As explained, nothing's changed. Yields are expected to top out going forward as charts are set up with negative divergence. Since semi's have started to break down, that will kick in the ongoing housing and manufacturing weakness, and the economic recession should be in play now. This being the case, the inverted yield curve should dis-invert to usher-in the US recession. Continuing the reasoning, some say it is mental folly but Keystone is used to it, and knowing that yields will retrace lower going forward as per negative divergence in the charts, that means the 10-year yield will retreat slower than the front-end 2-year yield (the 2-year yield will drop faster than the 10-year yield going forward). The UST2Y 2-year yield chart is in negative divergence in the daily and weekly time frames so she should receive a strong spanking occur (yield lower) and this jives perfectly with the above scenario. In October, yields will be slipping lower with the 2-year yield dropping sharply lower than the 10-year yield. Traders and investors will be buying notes and bonds with both fists so that means they will be selling stocks. October is going to be fun.