MBS AFTERNOON CHARTS: Who's Hungry?

Of course you've already seen one delicious2 day intraday chart, here's a more recent one with the 4% coupon.

Yes, there are some lines on that chart.  Yellow line on bottom is indicating a series of "higher lows" we've had since the open.  This would be a good line to track into the afternoon.  If we dip below it by more than a few ticks, it could be an afternoon momentum shift.  Likewise you can see the yellow line on the top with decsending highs.  So at each successive red dash, prices were felt to be too low and teal ticks, too high.  We'll let you know if we break out appreciably on either side.

Turning to longer term, let's take a look at how the Day-Over-Day (DoD) chart would look if trading stopped right now.

Again, a little extra color there in the form of a mark indicating a gap between yesterday's close and this AM's open.  This is significant because it is a factor that confirms a previous candlestick formation that has been forming known as the "Frypan Bottom."  If this pattern holds true through the close, we'll discuss it in much greater detail, and its implications for our purposes.

For now, you can see from the DoD chart that we are again nearing highs.  Whether or not you consider locking this afternoon might be informed by the extent to which you are seeing lenders pass on the gains from recent days.  If someone is really hanging the pricing out there, go ahead and take it.  If you want to wait into the afternoon, we will let you know if there are reprice indications from an MBS perspective.  Beyond your careful GUT-FLOP considerations, if you want to get floaty over the weekend, make sure you compare how much YSP is passed through by your preferred lender(s) today versus both last week and early january.  Seems every time we approach these levels we get knocked down.  Then again, maybe the $750bln + the tsy purchasing program + ramped up staffing is enough to bring us a bit higher this time.  Also, there's the bullish frypan symbol that could potentially show up after lunch.