Record profits for Fannie Mae

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Stocks opened higher as fears of European issues are fading. Fannie Mae reported a record profit of $17.2 billion for 2012, which is tied to increasing home prices and fewer mortgage delinquencies.  This has also been their first profit in six years. All markets are looking forward to the next 3 days of employment reports as a potential catalyst for direction.  Friday’s once a month Jobs report will be the highlight, but speculation of a number too high or too low could put a damper on the rally.  If it’s too low, then investors might exit stocks in a hurry, as record highs don’t correlate with sputtering growth.  If the number is too high, then the Fed might exit sooner than expected.  Estimates are set for 178,000 new jobs.  mortgage bonds are down slightly, but are attempting to break out of the dominant downward channel.  Technically, they are above support of the 25 and 50 DMA, but that could all change very quickly with the jobs numbers over the rest of this week.  We will maintain a cautious floating bias.

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