As we close the book on a holiday shortened trading day, the picture looks much the same as yesterday.  Fears of U.S. debt being downgraded, following a similar fate in the U.K., has traders on edge with many sellers and not so many buyers.  The liquidity of all markets stinks as well, allowing traders to push it around with little resistance.  The 10 year note off 25/32’s (yield 3.45%) and mortgage backs down 7/32’s tells the story.  Stocks up 63 on the Dow has had little effect.  The selling today has helped to start a new bearish daily trend but will need to see continued selling to force a breakout.  If the market can hold between 3.46% to 3.50% on the 10 year note, a bounce (rally) would be in order.  We expect at least a counter trend rally just to relieve the oversold oscillators on our charts.  Best strategy is to take any rally early next week and sell it, using the float down to hedge your customers again an even bigger move (stealth rally).  With the “game” being played out between the Fed (Quantitative Easing) and the market (inflation, fixed income downgrades, and potential treasury bubble) the outcome is unknown yet the stakes are high.  Have a safe and stress free holiday weekend.