MBS OPEN: Sell Into Strength. Buy on Dips. Fast Money at Work

Good Morning All. Happy Last Quadruple Witching Day of 2009. More importantly, Happy Friday.

Treasuries gave back some gains overnight. Several explanations could be offered but I think the most relevant observation continues to be "selling into strength" aka profit taking followed by fast money day traders  "buying on the dips"....this is really just short covering, another form of profit taking. This should continue to occur at pivot points, the hope is that the trade continues to migrate lower in yield/higher in price.

The 3.375 coupon bearing 10yr TSY note is currently -0-07 at 98-29 yielding 3.506%.  Here's how the market looked overnight into this morning...

"Rate sheet influential" MBS coupons are holding up well despite rising benchmark yields (which should fall below 3.50 again anytime now).

The FN 4.0 is -0-02 at 98-28 and the FN 4.5 is +0-01 at 101-17.

This is all supportive of "PLAY THE RANGE INTO YEAR END".....and suggests were are due a test of 3.42% (must get through auction stop of 3.448% first though).

Interesting story coming out of the Middle East this morning. Oil is up $1.30 to  $75.39 on reports of an incursion by Iranian troops into the Iraqi oilfield of Fakka. Will be watching my news ticker for updates...