We just wrapped up Q3, and the bond market had its worst quarter in decades.
You can see that when you look at the yield charts and the recent rise, especially since the Fed rate hike on September 16th, which was the first in three years.
Now I want to dig into the other side of the coin: how I’ll be monitoring yields on their pullbacks as they continue their likely ascent over time.
My 52.10 Forecast Was Hit Early
Here we have the daily chart of $TNX.X. This takes the 10-year Treasury yield and multiplies it by 10.
So, for example, a reading of 52.10 on this chart corresponds to a 5.21% yield.
Last week, I made a forecast that my expectation was for $TNX.X to trade up to 52.10 by October 1st.
Today is October 1st, and that target got hit early. It was met on Monday, September 28th.
But as you can see on the chart, it’s still a useful magnet, even currently pulling the price action toward it intraday.
So, with this forecast having been a useful guide for the yield chart action up and to the right, where do things stand here?
The First Level I’m Watching on a Pullback
Of course, it depends on the subsequent action on the chart.
But the first immediate level I’d watch is 51.62, from September 25th.
I think yields are likely to trade back toward that level before resuming higher. I think it would be a bit of a surprise to me if they fell much lower before resuming their move up.
From there, the next upside target I’m watching is 54.57. That’s the monthly high from April 2002.
I don’t expect 54.57 to be met right away, like this week, but I do think it would be reasonable for that level to be hit during October.
The Longer-Term Level Above
The other level I have marked on this chart is 58.85.
That’s the November 2000 monthly high, and it’s one of the key levels on the journey back toward the January 2000 range from the Fed tightening into the dot-com peak.
We’ll revisit my monthly chart when relevant.
But right now, the daily chart is giving us an important lay of the land for anyone doing trading where you’re concerned with what’s about to happen in the next few days or weeks.
I do believe yields are going to continue to be a strong influence on stocks as we kick off Q4.
So keep an eye on them.
👉 What Are YOU Watching?
I keep an eye on the 10-year even though I’m primarily trading the S&P 500 futures, because yields can have such a strong influence on stocks.
Do you regularly watch the 10-year Treasury yield as part of your trading? If not, what other market do you keep an eye on alongside the one you trade most?
Comment below, I’d love to hear it.
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