Locking Bias

Both stocks and bonds are slightly higher today.  With limited news reports today, technical factors are likely to dictate the direction of the markets.  Bonds are currently battling the 50 day moving average.  Although not as important as the 100 or 200 DMA, technical indications are important to watch.  As we saw earlier this week, when we run up to a significant moving average or trend line, the risk of a sharp movement down is high.

The Philly Fed Survey came in well below expectations yesterday.  It makes many wonder if the strong employment report earlier this month is a legitimate reflection of the strength in the employment market, or if the market is weaker than the latest report reflects.

Given the strength in the market so far this morning, we have a floating bias as we wait to see if bonds can break above the 50 DMA.  If bonds break lower from this level, we will quickly switch to a locking bias.