Stock Volatility at its Finest

After the single best day in the US stock market since 2009 yesterday, stocks are losing some of their gains in early morning trading. Yesterday brought hope to many anxious stock investors, only to have their hopes crushed this morning. A look back on pre-bear market histories will show a similar picture to what we are seeing happen right now. Tremendous volatility is one of the key forward indicators of a significant downturn in the market.  Although I’ve been saying this for over a year, I believe a downturn is coming. I expect to see days of strong moves in both directions, with an overall trend heading lower in the long term. This is a day trader’s dream market environment.

Mortgage bonds seem poised to make a run at the current ceiling of resistance that is preventing rates from making further improvements. If that ceiling is broken, we will see a nice reduction in mortgage loan pricing. Although we hate to see stock investors lose money, this is an ideal situation for mortgage interest rates.

There is no immediate need to rush to lock. However, watch the stock market closely. If it makes a comeback, mortgage rates could suffer.