Tuesday, December 3, 2013 - Article by: Joe Shamie - First Choice Loan Services -
Tuesday - December 3, 2013, 10:15 am ET
Current Trend Direction: Sideways to Lower
Float/Lock Bias: Change of position to LockingCurrent Price of FNMA 4.0% Bond: $104.03, +9bp
The benchmark 4% coupon is starting the day higher, but off the best levels and right at support at the 100-day Moving Average. There are no economic reports due for release today.
Bonds are getting a slight boost as Stocks take a break from their record bull run higher. The S&P is up nearly 27% this year and has not seen a 10% correction in 26 months, so historically speaking - equities are ripe for profit taking. But when you consider what Dr. Elliot Eisneberg posted this AM...maybe Stocks will continue higher:
"When the Dow Jones Industrial Average hits 16,220, it will hit a new inflation-adjusted all-time high. While the Dow is up 37% since its tech bubble high of 11,722.98 of 1/14/00, the CPI is up 38%. Of course, back in 2000 corporate profits were $482 billion while in 2012 corporate profits were almost $1.8 trillion. While the trailing P/E ratio is about 16.59, back then it was an astonishing 26."
Cyber Monday (12/2) saw a big surge in online holiday shopping with sales surging by 19% from last year. In addition, mobile traffic accounting for 30% of the total site visits, up 58% from last year. However, Black Friday saw an increase in traffic, but a 2.9% decline in sales from last year.
Over in the housing markets, CoreLogic reported that home prices, including distressed sales, rose by 12.5% in October 2013 compared to October 2012. October marks the 20th month of year-over-year home price gains. From September to October, prices rose by 0.2%. Home prices across the nation are still 17.3% below the peak set in April of 2006.
Technically, the 4% coupon is trying to hang onto support, which is mildly positive. But the bigger technical picture has us concerned. We are seeing a Head and Shoulders pattern - and no, this is not about dandruff, but the Bond's inability to bust above resistance and continuing to move sideways to lower after peaking out. In looking at the chart, technicians or chart readers would be "short" Bonds - which means clients should continue to lock until the technical picture improves.
Joe Shamie NMLS # 241432
First Choice Loan Services NMLS # 210764
First Choice Bank NMLS# 177877
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