Chop the 1 day chart off any time before 10AM and today ranks as one of the more boring in recent memory.  In fact, there is nothing new to share since the previous post as we're still in the same range and have not digested any meaningful market events other than the sounding of the closing bell (real and figurative alike).

Slightly less boring would be a longer term view that shows that this last trading day of the week has ONLY JUST TODAY brought us to the best levels seen so far this year.  MBS ended up 12 ticks on the day at 100-25.  The 10yr was up 17 ticks dropping the yield to 3.68 (wow!  AQ talked about that days ago.  Hat tip good sir).  Meanwhile, stocks lost fairly big, at least in the context of late 2009 and 2010.   A 100 pt loss in the dow and just over 10 pts in the S&P. 

But even that selling in stocks doesn't defeat it's recently established trend of higher lows.

And similarly in bonds, although there is some excellent support in MBS, and although the gains across the board have indeed brought us into some great territory, there are always more tests ahead.  And we always seem to find ourselves on some sort of fence by day's end.  (almost as if that's by design!  Hmmm!)

Being, as we are, on a fence, we're either going to trend to one side or the other next week.  the lower 3.6 range seems perhaps a bit heady without significant support from data and events, and although that might come, we're hesitant to believe that's in line with the market's truest intentions at this point. Here's a clip from our rate watch section today:

• I must share with you that we are very defensive of these improvements because we don't see gains being a long lasting trend. With that in mind, if you are closing in the next month, you should be looking to lock in soon. If you are a "fence sitter" or have an Interest Only ARM that is about to adjust, you should be considering a refinance before interest rates start rising. I hope its obvious how defensive we are...floating one day at a time.

At the very least, prices would have to ESTABLISH themselves at some level LOWER IN YIELD than the late DEC/ early Jan range before pushing into early December yields.  It's not as likely they'd simply shoot right down to those levels.  In fact, our slightly bearish slant of late seems to be more in line with DEFENSE!  For AQ and I, we'd be quite satisfied merely seeing the 3.71 pivot points hold up as support.  With that defensive stance in mind, it's cliche time: buy the rips, sell the dips.  Translated for the origination world, "try to lock when prices are at the higher parts of recent ranges and be wary of movements through support levels to the downside--aka lock."