No matter what the reason, traders respected chart patterns which projected good support, allowing for a nice little rally this morning.  Buyers started the party in Tokyo and quickly transfered power to stateside traders, interested in buying 30 year bonds.  Since the early gains, the market has been back and forth on light volume yet holding most of today’s gains.  However, the caution flag is still out as the market has not been able to trade above the 8 day moving average.  We really need a close above this level to find our comfort zone.

We see the set up as neutral, given a multitude of bearish divergences on one side and Fed Chief Bernanke and his dollar printing press on the other.  Throw all the factors together and you can make a good case for the market and Austin mortgage pricing to stall unit early November’s elections and FOMC meeting.

The fear factor today will be the results of 21 billion in 10 year notes crossing the auction block (high noon cst).  After yesterday’s dismal 3 year offering, the street is wondering who will show up to buy the paper.  Notes, bonds, and mortgage backs are respecting the fear of the unknown.  Currently, 10 year notes are off 15/32’s, the 30 year bond is off 40/32’s, and mortgage backs are cheating fate, down only 3/32’s.  Stocks are having a party, up 110 on the big board as corporate America churns and earns.

Technically, there are a couple of things you need to pay attention to.  First is the Elliott Wave count which has probably completed its 5 wave.  This pattern started in June and has been very accurate.  The break of yesterday’s trend line and continuance to trade below it is strong evidence that a new A wave has begun.  If correct, the pattern projects a trade to at least the 38% retracement target of 125 28 (10 year futures) or the yield equivalent of 2.58%.  This type of corrective trade could last for a month, slowly eroding Austin mortgage pricing until a bottom is found.

From our perspective, the market seems to have fully priced in QE2 and now must wait until the next FOMC meeting (11/2) to see if it comes to fruition.  The “wait” is making some nervous.  Continued corporate earnings, with the expectations that most will beat, will add additional pressure to fixed income and Austin mortgage pricing.  Best bet for Austin mortgage borrowers is to take a defensive posture.  With so much bond-friendly news priced in, the risk reward for better mortgage pricing is just not there, folks.

Japan chimed in, announced an interest rate move from .1% to 0.  They also have announced a plan to purchase government fixed income assets, hopefully allowing the Yen to fall and improve their export business.  Seems as though QE is going global.

Earlier today, the ISM Manufacturing Index rose nearly two points to 53.2.  The index unfortunately is still below the first half of the year and reflects GDP growth of 1.8% to 2.0%.  Stocks have had a nice day, starting with gains in Europe.  Currently, the Dow is up 187 points while the Naz has tacked on 54 points.

Under “normal” circumstances, one would expect Austin mortgage pricing to be getting its head handed to it.  Not so fast my quantitative fans.  10 year notes are up and mortgage backs are unchanged.  Don’t expect much of a down draft in pricing unless the Employment Report, due out Friday at 7:30 am cst is plus 200K or higher.  More on that Thursday.

Wanted to let this fly as current level mortgage pricing is now off 8/32’s as stocks continue to improve.  Worsening Austin mortgage rates are a NY minute away.

Real money and hedge funds have stepped aside, allowing the market to trade one way.  With that element of support taken away and stocks continuing to shrug off the Intel news (negative on Q4 revenue), we (our Austin mortgage rates/pricing) are caught in a nasty crossfire.  For today, when stocks go tick, bonds go tock.  Dangerous price action so be careful Austin mortgage borrowers!  As we speak, the 10 year note is off 40/32’s and 30 year bond down nearly 3 points.

Currently, the Dow is off a smooth 200.  The Naz is not much better, off 60 points.  10 year notes are plus 20/32’s and mortgage backs are lagging behind, up 5/32’s.  With the Fed once again the lender and buyer of choice, expectations are that they will purchase 15 to 20 billion a month.  This move will keep Austin mortgage rates low as traders will adopt the old trading slogan, “Don’t fight the Fed”.   In the news, our June Trade Deficit grew 8 billion to a record 49.9 billion.  Imports grew, exports fall, in a simple formula that did the damage.  Once again, this will be a drag on GDP.

We do have an auction today.  24 billion of 10 year notes hit the tape at high noon (cst).  Look for this to be a bullet auction will traders falling all over themselves to buy.  Put up a chart and all you see is a major bull trend.  With the 10 year now at 2.71%, a breakout to lower yields/better mortgage pricing has been confirmed.

In this market, best bet for Austin mortgage borrowers is to take advantage of the historic low levels of Austin mortgage rates.

At the open, the Dow fell 150 plus while the 10 year note and mortgage backs jumped 5 to 7/32’s.  As we speak, the 10 year note is plus 6/32’s, mortgage backs up 2/32’s, and the Dow off only 50 something.  With most markets being in a period of high volatility, anything can happen.  That’s why I’ll cut this short and tell you that the market is 1 to 2/32’s away from a worsening Austin mortgage price change.  Be careful out there.