Short term locking bias

Markets opened with stocks pushing higher, but they have since turned around with the Dow breaking below 14,000.  Who would have thought that investors are influenced by Italian elections?  However, reports that the austerity opposed Berlusconi is continuing to gain momentum is weighing on the rally.  Our own Sequester is keeping the politicians busy with scare tactics, as well as the media trying to determine how it will actually affect us.  It seems futile to expect any meaningful progress out of Washington, and they will likely come up with some last minute rescue plan to save us all from catastrophe…  This cycle is certainly getting old…  This week is packed with economic reports, along with the bond market also having $99 billion in auctions as well.  mortgage bonds are up slightly at the top of a price channel today.  However, the dominant trend is still lower, and that is keeping rates from improving.  Stocks can still turn higher anytime with the slightest reason to do so.  It wouldn’t surprise us to see stocks improve to all-time highs at the expense of bonds before rates get better.  Since stocks still have the momentum, any of the reports this week could be the catalyst to push them higher.  We will suggest a short term locking bias.