The "triangle" is a technical analysis term we often discuss on the blog.  It's created when trendlines can be drawn that connect recent highs and recent lows that form a triangular shape.  The significance of the triangle is that if the price curve breaks through the triangle on the upside, the rest of the day (or whatever time period we're examining) is more likely to be stable or positive as opposed to weak.  If it breaks on the downside, any gains from there are slightly less likely than stability or weakness.  A clear triangle formed this morning when the lows were higher and higher and all fell on the same line.  The highs were on a straight line as well with that particular trendline resting soundly on 100-04.  This is significant in and of itself as 100-04 was the BOTTOM of yesterday's range for a majority of the day.  This makes sense from a technical analysis standpoint as a floor, once violated, becomes a ceiling.  It's important to remember though that when speaking of these floors and ceilings that they are not so much "predicitive" in a forward looking sense, but rather significant when they are definitively crossed.  In other words, if I set a trip wire across my bedroom door for my two German Shepherds, Property and Damage, there's no probabilities at play that say they won't cross it.  Rather, I want to know IF they DO cross it, and at that time I can draw the conclusion they are slightly more likely to stay in the bedroom as opposed to going back across the trip wire.

As far as this AM's triangle, there are two ways it can be drawn depending on where we start the lines.  Different lines might be chosen because one has more connecting points whereas the other accounts for the highest highs and lows of the day.  You'll see what I mean momentarily.  Here is how today's triangle looks when we draw it with the upper line on the highest highs.

As you can see, the price curve crosses this triangle on the downside which indicated prices are not as likely to go back above the bottom line.  But because this line is sloped sharply upward, this would still allow for net gains on the day, just not as many as would be indicated by the curve crossing the top line.  There are some limitations to this triangle though, in that the top line only touches two points on the curve.  Furthermore, those points are among the "spikier" highs of the day and as such are not as representative of the actual trading range.  We can overcome this by redrawing the triangle with the "option 2" top line that connects at least 6 intraday highs and is further edified by being yesterday's support level at 100-04.  Here's what that one looks like:

On this trianlge, you can see that we did indeed break out on the topside.  And although prices did correct below that top line shortly after the breakout, they have since risen above and have tested that 100-04 price level as support, staying on the top side now for 30 minutes.

This is one of the problems with technical analysis: it can often give mixed signals.  Judging by advancing stocks despite the jobless claims numbers and the moderate give-back in treasuries, there is certainly cause to heed the warnings of the previous, more conservative triangle with the downside breakout.  The only other thing it has going for it is that it encapsulates the entire range of the day.  But the potency of the 100-04 level should not be discounted either after it was so obviously the bottom of yesterday's range for most of the day.  If there were data on a fundamental level to suggest movement in one direction or another, we'd sprinkle that in the mix and perhaps be able to get a clearer sense.  EVEN SO, here's the cool thing about technial analysis and about our jobs in general from an "intraday" standpoint: It doesn't really matter if we know in advance what's going to happen as long as we can draw the appropriate conclusions and take the appropriate actions with sufficient speed WHEN it happens.  And that's what we do!

So, conflicting triangle interpretations aside, it is safe to say that the 100-04 level is significant yet again today.  I don't think we should be too concerned with holding out for some massive rally between now and monday, barring another positive tape-bomb.  But those of us sitting on a chunk of potentially lockable pipeline should definitely be concerned if prices go below this 100-04 level either by a large amount or by a reasonable amount but for a long time.  The beauty of the process is that you will be made aware of either eventuality when it happens which almost always leaves enough time to beat lenders to the punch.

Whatever you do, today is a good day to stay tuned to MBS movements and also to be considering more of a medium term lock outlook.  We're coming to the top of a week of gains (maybe?  I mean we all hope it's not the top, but statistically that's more likely).  If you just looked at the vascillations in the day over day charts, it wouldn't take any understanding of the markets or technical analysis for most to agree that "that line looks like the next thing it's going to do is go down."  That "going down" may be a day or two, a week or two, or (heaving forbid) a month or two.  The other consideration we have here is that tomorrow is our traditionally worst day of the week: Friday.  So if we get the normal Friday weakness, plus the normal topside momentum shift weakness, this afternoon would look like an awfully smart time to lock.  Ultimately that's your GUT to FLOP, but my advice would be to stay on top of potential reprices for the better today, and really evaluate how close to an ideal pricing scenario your deals currently are.  Sure, many things could happen to illicit further gains in this market, but technical evidence is mounting that a "good time to lock" may be upon us.  For now, no rush until cut-off's approach as we're stable and sideways over our 100-04 line.  You'll probably want to wait to pull any primed triggers until we break that floor (if we break it) as this will allow more time for any lenders considering a reprice for the better to do so.