Two fundamental factors, Pending Home Sales falling 16% and the Fed being open to extending the MBS purchase program to help underpin the housing industry gave us the boost. The chart work I was waiting to see was if we could close above the 8 day moving average, something we haven’t done for over 2 weeks. Given that fact that we closed above the 8 day, many bearish signals (ADX, Trend Intensity, etc.) have been neutralized, crippling the bears and reducing the probability of continued bearish trending. In other words, the light we were seeing “is” the end of the tunnel which should produce better mortgage pricing into Friday’s Employment release (7:30 am cst). Given the severity of the selling over the past 3 weeks, we could easily see another 1 point gain in the 10 year and another ½ point improvement in MBS. This will need to occur within a short time frame (2 days) as all bets are off come Friday.
The light we were seeing “is” the end of the tunnel which should produce better mortgage pricing into Friday’s Employment release
About the Author: Max Leaman Austin Mortgage
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