hidden rsi divergence
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RSI showing higher highs however graph is still showing lower lows. On the shorter time frames it is terribly overextended. The daily also very extended itself and has previously shown signs of exhaustion as highlighted in the attached idea below. 2 islands was a strong resistance point.
The fed has declared no more rate hikes which means short term bonds will most likely remain around 2.5%. While money seems to be being dumped heavily into longer term 10 year and 30 year bonds.
The bond price is inverse to its yield, therefore keeping in mind the increase in the price of long term bonds, this will surely drive the yield down further. That being said, 10 and 30 year bonds are also very extended in terms of strength and is showing sign of exhaustion. If that holds true and we are still going into an economic contraction phase, that means that the yield curve won't necessarily have to invert to signal the next recession in stocks.
Many investors are looking to the yield curve to predict the next recession but I believe that even won't happen and investors waiting for that signal will be fooled.
attached is the yield curve and the price of gov treasury bonds.
The fed has declared no more rate hikes which means short term bonds will most likely remain around 2.5%. While money seems to be being dumped heavily into longer term 10 year and 30 year bonds.
The bond price is inverse to its yield, therefore keeping in mind the increase in the price of long term bonds, this will surely drive the yield down further. That being said, 10 and 30 year bonds are also very extended in terms of strength and is showing sign of exhaustion. If that holds true and we are still going into an economic contraction phase, that means that the yield curve won't necessarily have to invert to signal the next recession in stocks.
Many investors are looking to the yield curve to predict the next recession but I believe that even won't happen and investors waiting for that signal will be fooled.
attached is the yield curve and the price of gov treasury bonds.
Note
2 year treasury bond at 2.5%Note
10 year bond price overlayed with 30 year bond price. They are both very highNote
Below is the yield curve (difference between 2 year yield and 10 year yield)It also shows a rsi divergence which is hinting at the fact that it could reverse prematurely.
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