No news today but the calendar starts to heat up tomorrow with some housing data and Wholesale Inventories.  We will however, need to deal with 81 billion in auction paper (3’s, 10’s, and 30 year bonds) starting tomorrow.  Looks to me like the market is playing its own version of “We won’t get fooled again”, trying to balance risk premium, the Fed’s exit strategy, and the removal of stimulus with European sovereign debt issues (Portugal, Ireland Greece, Spain aka PIGS), unemployment, and Capitol Hill concerns.  Currently, the 10 year note is off 12/32’s (yield 3.59%), mortgage backs off 7/32’s, and stocks down 30 something on the big board.  Technically, the bias is for a defense/neutral trade with traders looking to sell the market at better levels.  On the plus side, the market has held at the upper end of the range but not been able to build on Friday’s breakout.  Momentum has fallen as traders set up for all of the above (auctions, etc.).  The pullback is helping to work off overbought conditions which is another plus.  Even the daily oscillators we follow continue their bullish trend.  Let’s call the market neutral but easily influenced by a number of cross winds.  A trade above 3.61% on the 10 year note will tell you the bull has left the barn!

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