Trend Channel Looks Good

I know this site is badly in need of graphics, but you'll have to use your imagination for this one.

I watch a running live line graph MBS prices all day.  So imagine a similar curve that you might see on a stock market graph.

By taking 4 points on the line--the first significant highs of the morning and the first significant lows of the morning--and drawing a line connecting the lows and another line connecting the highs, and extending those lines further along the timescale, we are left with railroad tracks moving diagonally upward.  This is known as a trend channel.  I do not plot the lines exactly on the points, but rather add one standard deviation so it is slightly wider.  Here are some examples of trend channels: http://newsletter.neoticker.com/2006/10/12/using-trendline-and-trend-channel/

The hope is that the scatter plot of bond prices and the line those prices creates stays within this trend channel.

Like clockwork all morning it has bounced up and down inside that channel, and though it has tested the low bar recently, it appears to be holding relatively within the channel.  If it stays in the channel for the rest of the day, rates will improve more than they already have.  But even if it simply levels off, you are still cleared to float.

We have 3 hours of MBS pricing left.  Keep floating into Monday unless you hear back from me.  If bond prices take a dive, I'll alert you in time to lock, unless I am struck by lighting.

Happy Floating!