Know Your Time Frame:

The 10-year yield has a lot of implications among many different types of loans and it is forging higher. The homebuilders are feeling the pain, which may be temporary, with the ITB dropping 4.3% this week so far heading into Friday, and if it holds would be its largest WEEKLY loss since the first week of November 2022 (it is also a bearish engulfing candle too thus far making a possible double top in the area dating back to the weeks ending 12/17/21 and 1/7/22). Getting back to the chart of the TNX one can see on its daily chart below it may encounter some headwind here as its recent bull flag breakout has traded into a bearish evening star pattern from early March. It is looking to act better near the “round” 4 number here, as it backed off there in Q1. However, on its WEEKLY chart, the taut trade has produced a good-looking double bottom pattern that I feel could eventually go on to much higher PRICES from here. What does it all mean? Know your time frame. If you are a shorter-term trader the daily chart is telling you perhaps a bit of a pullback here to retest the legitimacy of the flag breakout, before a longer-term WEEKLY potential, solid advance following a break above the double bottom trigger near 4.1%. Notice the WEEKLY bullish MACD crossover, its first since last September, is gaining steam.

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