18 Nov Cautious float as we keep our eye on the 200 DMA
Markets opened this morning with both stocks and bonds pushing higher. mortgage bonds have worked their way back up to the top of previous levels from a week ago, where they were when the monthly jobs report surpassed expectations. As expected, that report caused mortgage bonds to fall sharply. Now that we are back in the range prior to the report, interest rates have ratcheted down. Bond prices are trading right at the 200 day moving average, so there is risk of a pullback in this area. However, momentum looks like it could be strong enough to break through, so we will suggest a cautiously floating bias to give the momentum a chance.
There is not much in the way of news today, but the rest of the week is filled with potential market moving economic reports. Stay alert and watch for the bond to make a break above the 200 DMA or see if it gets pushed back down. One way or another, we will likely see a sizable movement.