CHARTS: MBS Potentially Finding Support On The Day

While all that follows could be at moot point tomorrow and beyond, for today at least, parts of the market are leaving the possibility open for MBS to bounce at this morning's lows.  Whether or not that turns out to be the case probably has more to do with how stocks and Treasuries treat their own potential technical bounces.  So to start, here's a short-term look at the 1.90 pivot point in 10yr yields, possibly acting as a supportive ceiling:

Whether or not yields ultimately stay under 1.90 today remains to be seen, but it's clearly a technically significant level.  1.90 has come into play horizontally, in and of itself, and it's also roughly in line with the mid point of the longer-term trend today.  Take a look:

If that bounce is going to pan out, we'll likely need Stocks to cooperate.  So far, they've experienced somewhat of a ceiling of resistance today in the same way Treasuries have seen their ceiling of support at 1.90.  If we zoom in from the long term chart we showed earlier, S&P's are actually bounced against the long term trendline (also an intermediate pivot line as seen below):

But just because that line "works" in a technical sense so far doesn't mean that it will turn out to be the best indication of where stocks are actually headed.  For now, it's just one of the possibilities, and we'd be remiss or have the bear-blinders on if we didn't entertain others.  For instance, maybe stocks have already broken back above their danger zone perhaps marked by 1114.  Certainly a case for that in the chart below:

Other potential horizontal indicators include 1125 and 1102.  Shown in conjunction with 1114 in the chart below, these could serve as good milestones for any future selling pressure.

So far, the net effect of Treasury yields and stock prices ostensibly holding their ground sideways has been for MBS to take a deep breath or two and slowly try to climb out of their hole as seen below:

In the bigger picture, this is part of the bounce in the long-term trend channel for Fannie 3.5's.

Bottom lines:

- keep an eye on 1.90 in 10yr yields and the low 1130s in S&Ps.  The more severely these are broken, the more pressure MBS would be under to retest the lower limits of the trend channel, and loan pricing could deteriorate.

- Naturally, MBS would need to be at the lows of the day, near 102-13 and potentially even moving lower in order to confirm that the aforementioned factors were negatively affecting MBS.