Wednesday, October 9, 2013

Another look at Treasury yields

Yet another important index worth watching in the days ahead is the 10-year Treasury Yield Index (TNX). 

In the Sept. 23 report I wrote, “Let’s watch for potential support in the coming days as TNX approaches the 25.50-26.00 area.  The technically important 90-day moving average intersects this area and looks like it could provide support should TNX drop to this area.  A lateral trading band with parameters at roughly the 25.50-26.00 area on the low end and 29.50-30.00 on the high end is a strong possibility in the coming weeks.”

As you can see in the [above] chart, TNX has established support above the 90-day MA in the last two weeks and is threatening to rally from this support.  A rally in the Treasury yield would put additional downside pressure on equities, so let’s continue to monitor TNX. [Excerpted from the Oct. 7 issue of Momentum Strategies Report]