Careful floating bias

The S&P 500 closed at another all-time record high yesterday, as the potential for an asset bubble in the stock market continues.  The Federal
Reserve is mildly concerned about the seemingly unstoppable run in stock values as well.  The anticipation of a rate hike has certainly impacted
the bond market and interest rates.  However, the stock market again appears to be oblivious to the potential impact this can have to businesses. 
In fact, the stock market seems to be ignoring all indications of a slowing economy as well.  If the Fed chooses to hike rates soon, which we
still see as unlikely, this will add an additional headwind to continued economic growth.  The Fed realizes this.  However, stock market
investors are still in the dark.

After several failed attempts to break above the 200 day moving average, just as the market was ready to close for the night, mortgage bonds poked their
heads above.  This symbolic move was continued this morning when bonds opened up higher right from the bell.  This move hopefully shows us
that bonds found their bottom and are now ready to make another run higher.  From a technical standpoint, bonds are off their downward channel
and appear to be forming an upward channel that could take rates back to the 3.5% level they were at when the rapid market deterioration began. 
That would be a welcomed sign for summer home buyers and could help stimulate more home sales. 

With bonds finally above their 200 DMA, we can take a cautiously floating bias to see how far this recovery will take us.  Bonds are now challenging
another resistance level.  If they are pushed lower as the day progresses we will switch to a locking bias to capitalize on the gains we have
made since late yesterday afternoon.