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Is The 10-Year Yield Calling For A Rise In Bond Prices?

Published 08/22/2012, 09:32 AM
Updated 07/09/2023, 06:31 AM

Well the S&P 500 finally saw some weakness yesterday. Based on what I’ve seen on various blogs and Twitter, it’s amazing how quick traders' sentiment flipped to bearish. The last few weeks it felt like traders hated the rally, but the smarter ones knew not to fight the tape and to respect Mr. Market. Has the tide shifted? We shall see. My take on things is pretty well documented on this site so I won’t rehash it now.

Bonds have been a big story it seems this year, with yield taking out a new all-time low in July, it’s hard to believe that we are already at a point of being potentially overbought on the 10-year yield. Which is the chart I wanted to share with you today.

Below we have TNX, the yield of the 10-year Treasury Note. On the top panel I’ve plotted just a simple 14-day Relative Strength Index (RSI). I’ve put blue circles on past occurrences of the RSI breaking above 70, and as you can see, this has resulted in past resurgences in bonds (with yields dropping as the chart shows). The 10-year yield has also found its 200-day moving average (blue line), which is acting as resistance.

So we have momentum possibly being overbought and resistance showing up for the yield on 10-year Treasury bonds. Pre-market action this morning in TNX appears to be confirming this, dropping to 1.76 at the time of this writing
TNX CHART
Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer.

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