Could interest rates be peaking after moving much higher over the past 5-years? Yes! Joe Friday shares that the yield on the 5-year note, looks like it created an important topping pattern last month.

This chart looks at the yield on the 5-year note over the past 20-years. Bearish monthly Doji Star topping patterns took place at the highs in 2000 & 2006.

In October, yields look like they created another Bearish monthly Doji star topping pattern, as yields were kissing the underside of 20-year falling resistance.

Joe Friday Just The Facts Ma’am- If yields break rising support at (2), odds increase that interest rates hit a short-term high at the underside of 20-year resistance!

Could this pattern be important to the stock market as well as bonds? Yes!  When these bearish reversal patterns took place in 2000 and 2006, bonds started multi-year bull markets and stocks were topping, followed by multi-year bear markets. 

What yields do over the next 60-days, following the bearish Doji Star patterns, could send highly important messages to both bonds and stocks! In the past, falling yields at 20-year resistance suggested that stocks were near important highs. Time will tell if its different this time!

 

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