Locking will be the safe play

There were no economic reports this morning to drive the markets.  Stocks took a step back yesterday afternoon, with the Dow closing below 16,000 and the S&P below 1,800.  While these are just psychological levels, the gains seen for the year are tempting investors to take some profits off the table.

Even so, the drop in equities kept bonds from falling through support.

Stocks opened lower this morning, and bonds are slightly positive.  mortgage bonds are clinging to the 100 DMA for now, but momentum is to the downside.

As we have talked about a lot lately, we should never downplay the significance of support and resistance levels.  With that in mind, a break below the 100 DMA will cause interest rates to ratchet up a level.  The rest of the week is packed with market moving reports like ADP Employment, GDP, and Friday’s monthly jobs report.  The safe play will be to lock and avoid the volatility.