Is it a coincidence that 10-year yield climbed to 1.00% from 0.75% in the days following Pfizer's vaccine announcement (and perhaps in reaction to the apparent result of the presidential and senate elections), and then hit a wall, asks Mike Paulenoff of MPTrader.com.
Not if we consider the big bad Fed lurking out there, scarfing up all Treasury supply even if the economic data appear to be stronger than expected.
Then again, there is the virus to contend with, perhaps for several more months, which could (definitely will) impede economic growth. There is also a potential shut down by a new Administration (or so some pundits will have us believe) to combat a "second wave," and possibly, just possibly, investors seeking a flight-to-safety atop a 68% up move in the stock market since March.
With the Fed lurking, and lots of uncertainty about the virus and growth, who would be surprised to see yield head back down precipitously in the days or weeks to come?
The 20+ Year Treasury Bond ETF (TLT) has turned up and is hinting that such a scenario definitely is percolating.
Purely from a technical perspective, the most recent slide from the Aug high at 172.25 into yesterday's low at 154.66 has the right look of downside exhaustion and completion and is accompanied by multiple positive four-hour momentum divergences right at the prior significant low in June 2020 at 153.16.
As long as 154.66 to 153.16 contains any forthcoming weakness, TLT is poised for upside continuation to 162.00-163.50 to challenge important resistance, and if taken out, then to challenge 165.50-167.00.
Mike Paulenoff is co-founder of MPTrader.com, a live trading room featuring his analysis on the key market indices and bellwether stocks & ETFs.