10-Year Treasury – Andrew Thrasher

What The 10-Year Yield is Telling Us

Posted on March 27, 2013 by Andrew Thrasher, CMT

My latest piece for TraderPlanet takes a look at the latest price action in the 10-year Treasury yield. Below is an excerpt:

This morning we are seeing a gap down in the 10-year yield, breaking below 1.9% and approaching the late-February low of 1.84%. Since Mid-March the Treasury yield has been sliding lower, all while equities threaten to hit new highs. With this morning’s gap we see yield breaking below a rising trend line which helped create a small symmetrical triangle.

Go read the rest here: What the 10-Year Yield is Telling Us (TraderPlanet)

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. Connect with Andrew on Google+.

The Concerning Bond Yield Divergence

Posted on March 4, 2013 by Andrew Thrasher, CMT

There’s a common belief that the bond market leads price action in equities. If this is true then the recent divergence in the 10-year yield isn’t looking good for stocks.

Here’s a piece of my TraderPlanet article this week:

Last week bulls did their best to regain the prior set highs, and they almost accomplished their goal as we finished the week just under 1520. This is great; however, Treasury yields did not have the same type of recovery. As the chart shows bond yields continued to decline, putting in a lower low while stocks were attempting to rebound.

Click over to read the rest: Bond Yield Divergence Worries Equity Bulls (TraderPlanet)
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. Connect with Andrew on Google+.

Small Traders Hate Bonds

Posted on January 21, 2013 by Andrew Thrasher, CMT

In this week’s article for TraderPlanet I take a look at the bull/bear case for 10-year Treasury bonds. Momentum doesn’t look too good but based on COT data there might be some bright spots.

Here’s a blurb:

There’s little doubt in my mind that going into 2013 one of the most hated asset classes was bonds. With the report from Lipper of massive inflows into equity mutual fund, the largest amount since March 2000, nearly every major Wall Street strategist turning into a bond bear and the likely lack of interest rate activity it’s easy to understand why people have turned sour on bonds. However we have had low interest rates for over four years with the only option for rates to rise, bonds still have performed handsomely. It’s been over 30 years that this current bond bull market has maintained its legs, and various indicators are giving mixed signals for whether or not its run can continue to run.

Go read the rest: Everyone Hates Bonds… Should You? (TraderPlanet)

Have the Equity Bulls Grown Tired?

Posted on January 4, 2013 by Andrew Thrasher, CMT

I’m starting to see some developments in equities that are becoming concerning. What I see taking place could lead to a market top in the next few days/weeks or could be worked through by some form of consolidation that equity bulls follow-up with a continuation of the current uptrend.

The first chart I want to show is the monthly S&P 500. By taking a step back and looking at a longer-term chart of this index we can compare past market tops to the current environment. What I want to focus on here is the lower highs that took place in the 7-period Relative Strength Index at the top in 2000 and again in 2007. Being still in the first week of January we can’t come to a complete conclusion if we get another lower low in momentum, we must be patient and let price dictate our actions. What we would be looking for is a solid break of the rising blue trend line that the $SPX has treated as support since the bull market began in 2009 in order to get a type of confirmation that equity bulls have lost their grip.

The next chart I want to take a look at is the ratio between the 10-year Treasury Note and the S&P 500. This chart looks at the weekly price ratio between bonds and equities. This is not a science, there is not a magical level that triggers the top based on this relationship. However, the ratio is now at a similar level that we saw in September ’12 and early 2011. We can also see that each rally off the lows in 2010, 2011, and 2012 put in lower highs for the bond-equity ratio. While stocks advanced they did not do so with the same gusto as each previous move. Is this a sign that the Fed’s QE programs are having less of an impact? Maybe.

Looking at a lot of daily charts, I’m noticing quite a few divergences. At this point they are small, but still present. These types of things can be easily worked through, and I hope they do. I’d much rather see prices continue their advance. While we are still in an uptrend (as the monthly chart shows) it appears to be getting weak.

You’ll notice there’s nothing I’ve said that pinpoints the date of a market top or a call for equities to come crashing down. Could it happen? Sure. What I’m looking for is a trend change or more signs of weakness in order to become bearish on the equity market. In the end I remain faithful to price action and what it tells me. I think the next few weeks will be very telling for how things will shape up for 2013.

Going forward we must contend with the debt ceiling, Q4 earning session, and potentially more whispers of the Fed ending or pulling back on its market intervention. This is a lot for the market to take on, we’ll see how traders react and if the above mentioned concerns are able to be extinguished or if we begin to see a shift in the capital markets….Time shall tell.

Treasury Yield Channel

Posted on December 14, 2012 by Andrew Thrasher, CMT

Yesterday we saw some fairly heavy selling as equity bears were able to get the S&P 500 to close below the 1420 level that’s been fairly important this year. Equity price action also made us bounce off of the 50-day moving average. But the selling might have been enough to give us the bearish confirmation that the candle formation we discussed yesterday was looking for. Overnight we got some decent flash PMI data out of China and a few bright spots in Europe. However, futures are about flat so we don’t have any clear direction for where things will be headed when the morning bell rings.

Today I want to take a look at the 10-year Treasury Yield ($TNX). While equities were selling off yesterday, we did not see the same action play out in the Treasury market. In fact, yield actually put in a nice gain which indicates that bonds also were being sold alongside equities yesterday.

While bonds continue to drop we’ve been able to see the yield on the 10-year create a channel as the chart below shows. The previous three touches of the top trend line has also been associated with the 200-day moving average stepping in to knock yield back down. Yesterday’s advance has taken $TNX a be just a hair away from its 200-MA and a few basis points from the top of the channel. We’ll see if Treasury’s continue to sell off and if the 10-year yield will be able to get past the moving average to make it back to the top trend line.