The stock lever is broken...  Sure, it is still fairly easy to see things lining up on an intraday basis, but day over day, any positive correlation is destroyed.  It's not that hard to accept that enough money is coming back off the sidelines to keep both sides of the fence green more frequently than normal.  But it begs the question, when does lever reconnect?

At least we know it wasn't at stocks' open this AM.

Couple things to note on the the chart above...  Blue line is S&P as always...  And the 3.38 is thrown in for reference to a very commonly occurring price level in recent months..   Other than that, the chart shows two consecutive days of gains for both the 10yr and stocks...  Again, more uncommon than not...  So, is there a magic number in stocks that would prompt a bit more fear for bond prices?

I'm sure there is, but if you find it, let me know...  1100 is still a contender, but if the close resembles the day so far, we'd have the first vote against such a level.  Why?  because we are through it today and limited reaction from bonds to the multi-month highs in stocks...  But it would just be the "re-test" at this point and we'd need confirmation tomorrow..  Not only that, but we'd also need to see a decent amount of volume today, and at this point it looks like we might just make it near friday's levels.  Her's the big picture of what' we're dealing with in the S and P  (chart says 10yr, but it's the S&P)

I don't like to point it out, in case the stock lever comes back into play sooner than later, but from a technical perspective, the last time we saw a similarly steep multi-day rally was in July.  And that was aldo the last time we didn't conform to the recent "wave" trend...  But although that might hint at our necessity to be prepared for anything, it doesn't change the fact that the bullish earnings season is already being  qualified in the context of stimulus, cost cutting, and trading profits afforded by the "borrow short, lend long" yield curve.

Speaking of yield curve, we're finally seeing some more measurable movement tighter.  2's 10's is down to 257.6 bps at the moment.  Contributing to that is a 2yr note at .814 and a 10yr at 3.392.  versus sub 4.3 current coupon is MBS, spreads remain historically tight, but are showing some signs of widening in the lower end of the stack--but it's barely noticeable.  Spread situation notwithstanding, 101-27 in 4.5's is such an exceedingly high historical price that your trigger finger on the lock button should stay as itchy as possible if you haven't started your own version of profit-taking already... 

With the AM data behind us and the customary AM volume dying down, the upcoming significant event is Bernanke at NOON!  We'll let you know if there's an appreciable market reaction ASAP.  Any time he takes the podium, anything's possible...