Soft floating bias

Stocks are continuing their slide lower so far today, following through on their losses from Friday.  The sell-off is helping support higher bond prices.  Both mortgage bonds and the 10 Year Treasury Note are both looking good, with each breaking through important levels of resistance.  This is encouraging; however, if the stock market reverses and moves higher, it will be at the expense of the bond market.

This is a relatively mild news week.  In light of market moving announcements, the technical picture tends to drive the markets.  At this moment, the technical picture tends to favor bonds and paints a weaker picture of the stock market.  The stock market rally has been unbelievably strong since early February.  A pull-back from these lofty levels isn’t much of a surprise.

We will suggest starting the morning with a floating bias.  However, watch the markets closely today.  If the stock market reverses course and moves higher, it will likely deteriorate gains in the bond market.  Should that occur, we will change to a locking bias.