Concrete Ceiling Now Acting Like a Floor

For the 2nd day in a row, MBS made progress in bouncing supportively off what had once been incredibly firm resistance.  We speak of course of the “concrete ceiling” that had prevented Fannie 3.5’s from closing higher than 101-25, ever.  The ceiling was obviously shattered with last week’s FOMC announcement which specifically mentioned reinvestment into MBS.  At least it looked shattered.  Prices quickly fell back to earth and we were left hoping that the once-mighty ceiling would now act as a floor for MBS, (we made note of that possibility here).  And now today’s trading action further supports the possibility that this will turn out to be a major pivot for MBS, but not without some resistance at 102-17 at least in the short term:

Elsewhere in the world of candlestick charts, we see ongoing confirmation that SP’s have broken bearishly out of their recent triangle.  I’m not sure how much I’d read into this considering month/quarter-end positioning concerns, but it’s interesting for now:

Slightly less open to interpretation is the fact that stocks and bonds stayed relatively well-connected today.  With no auction on tap, same could be true tomorrow:

Article source: http://www.mortgagenewsdaily.com/mortgage_rates/blog/230913.aspx

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