Strap on your seatbelts

Markets opened the week with stocks close to unchanged, but mortgage bonds fell through the 200 DMA as support.  Pending Home Sales for December came in lower than expected, but Durable Goods orders were higher than expected.  Stocks have had a strong run, but appear to be catching their breath for the time being. On the other hand, bond investors may be anticipating some new insight from this Wednesday’s FOMC meeting.  The previous series of better than expected Initial Jobless Claims, as well as positive housing reports may be the reason the bond market has been selling off.  Investors will take any hint of positive sentiment from the Fed as a potential change in QE stance.  With stock momentum pushing up and indexes so close to all time highs, we will take a locking stance as long as bond prices stay below the 200 DMA.  As we have stated in the past, a drop beneath the 200 DMA may be a sign of significant change in rates to come.  Strap on your seat belts, we may be in for a ride!