With bonds making all time lows in yield I did a special post on long term charts using TYX last week here. I thought both standard technical indicators and pivots indicated lower.
Comments referring to TYX and yield: "RSI OS (oversold), but Bollinger band action is quite negative here... A reaction move would be normal, but given the momentum think we will ultimately see lower... "
And pivots: "First target Q3S1 at 2.10, then 2HS1 2.02."
So we saw 2.10 last week. We are starting to be in an area where a turn is possible, but given the momentum I think the most likely move is a bounce in yield (drop in TLT), then a move to longer term targets ie lower in yield higher in TLT. For TLT pivot view see today's safe haven post. Also keep in mind that on TYX we just saw near YS1.
Let's look at charts again to show how rare the current move has been.
TYX Q
We don't even have Bollinger bands on the quarterly chart until 1984. Due to the relentless downtrend there are a number of quarters that have traded or closed outside the lower band: 1986 Q1 & Q2, 1991 Q4, 1992 Q3 barely, 1993 Q1-4 all year, 1998 Q3-4, 2002 Q3, 2003 Q2, 2005 Q2, 2008 Q4 and 2009 Q1, 2011 Q3, 2011 Q4 barely, and now 2016 Q3.
Sometimes the reaction has been a weak reaction sideways to climb back in the band like 2002-03 and again 2005-06, but some of the other snapback rallies have been pretty strong. Outside the band is trouble so we'll first have to see back above 2.12.
TYX M
(1990s and 2000s separated into 2 charts.)
Outside the lower band and RSI OS (oversold) is very rare combination.
1986-Feb
1986-Mar
1986-Apr, major low
1993-Feb
1993-Aug
1993-Sep
1993-Oct, major low
1998-Sep
1998-Oct, major low
2001-Oct (RSI close enough), near key low
2002-03 RSIs close but not quite OS, ditto 2005
2008-Nov
2008-Dec, major low
2011-Sep
2015-Jan, major low
2016-Jul, ? ? ?
So we're talking about 15 months or so since 1981 that have been outside the monthly BB with RSI oversold and one of them is now. A third of these have been near major lows in yield - not the low obviously, since that was just recently, but most of these cases a turn that held for several months or years. It doesn't have to be this month, but could happen soon, this bar or the next few.
TYX W
I am not going to repeat the same exercise (ie counting bars outside the BB and OS) but point is the same. It is well under the band here currently 2.24 but will be lower as next week opens. In 2011 there were 7-8 weeks outside the band and OS before a stabilization move; and in 2015 there were 4 bars outside with OS before a strong snap-back rally. Here we are on 4-5 (6/20 week inside the band in the middle of 4 surrounding bars outside).
TYX D
Only minor daily BB divergence - no RSI divergence. Weekly chart neither showing divergence. Usually (but not always) we will see divergence before a better turn up.