Weekly Unemployment Claims hit the tape this morning, down 12K to 502K.  Continuing Claims fell as well, down 139K to 5.6 million.  Both indexes were better than economists expected but seasonal factors helped the Weekly Index while the exhaustion of benefits was the main driver behind the drop in Continuing Claims.  Numbers look better but it is still tough out there on the jobs front.  The main focus today will be how well 16 billion of 30 year treasury bonds are received.

Trading action has been choppy all week and today is no exception.  Currently, the 10 year note is up 3/32’s (3.47% yield), mortgage backs up 2/32’s, and stocks are down a U.S. Grant (50 points).  The 10 year note chart reflects a trade holding in the middle of a tight range.  We see the market as being in harmony on most chart time frames with the market building a bullish bias.  Buy signals are active on most oscillators with support holding at the 8 day moving average and resistance holding at the old September highs.

Prices continue to probe the neckline of a reverse head and shoulders pattern but we will need the market to close at or below 3.45% to keep rally hopes alive.  The auction will be key to our short term direction.  Notice how the purchase applications hit a 9 year low and yet interest rates are available at historic lows.  Tells you how strapped the consumer is.