Stocks Rally Higher

Unfortunately for mortgage interest rates, the stock market turned a negative technical signal and proved its strength this morning by making a powerful rally higher. This confirms the stock market is still in a strong upward trading channel, which has now broken above the 50% correction level. If this recovery continues, and stocks close above the 50% level at the close of trading today, it could spell trouble for mortgage interest rates in the near term as stocks would likely take another step higher. With plenty of room for bonds to move in either direction before hitting the next levels of significant resistance, anything can happen at this point. Let’s hope bonds find the strength to at least hold on where they currently sit while they build strength to make another move higher.

As the federal government shutdown moves into its 25^th day, stock investors seem to largely be ignoring the longer-term consequences this will have on the broader economic outlook for the United States. With no resolution in sight, both parties seem to have their heels dug in as they prepare for this shutdown to continue into the foreseeable future. With 800,000 federal employees essentially out of work, or at least a paycheck, many will soon face significant personal financial repercussions. At some point, something will have to give.

With stocks climbing higher, we will maintain a locking bias.