Both stocks and bonds have been a little sloppy today, trading in opposite directions.
Stocks opened on the plus side, getting a lift from White House statements talking about keeping banks and other financial institutions in private hands, not having any intentions of nationalizing them. Citibank, however, is back with hat in hand, looking for additional funds to keep the doors open. Looks like the tax payers could own as much as 40% of that mess within days.
The news initially rallied stocks and hurt bonds/mortgage backs. Since the open, stocks have lost their luster, currently down 160 points on the big board.
No news today, other than our politicians talking it up, but the balance of the week will be chocked full of Consumer Confidence and the FHFA House price index tomorrow, Existing Home Sales on Wednesday, Weekly Claims, Durable Goods, and New Home Sales on Thursday, and preliminary GDP/ Chicago PMI on Friday.
Sir Bernanke will be testifying tomorrow and Treasury Secretary Geithner will provide more details on banks/toxic asset bailouts on Wednesday. Throw in another 94 billion of treasury paper going to auction and you have a witches brew for volatility.
For now, the bulls have kept the market (treasuries/mortgage backs) from deteriorating further by holding above the lows of last week (high yield mark). Conditions do remain mixed as buy signals are present on daily charts but trend studies lack direction signals. This type of market will typically tread water until better info becomes available, forming a trending market.
Elliot Wave studies still remain bullish but need a new rally to make their case. Best to take the safety off and play a little more defense.