Sunday night’s gap open in the notes and bonds was right at the bottom of recent ranges. Since market is not in a trend mode the early action turned out to be a selling excess for Monday’s range. Actually the lows traced out might turn out to be good for the whole week ahead because Sunday nights have a track record of turning out to be high or low water marks. As today’s session progresses market is currently working on filling gap left from Friday’s close. The bonds will likely accomplish this since the opposite trade is occurring in the stock indexes. Selling hit the NASDAQ on the higher open Monday morning as a further rotation out of technology related names but now is spreading to the general market. Mild profit taking underway and appears to be rather persistent for a change.
It is a little shocking that the big future deficits to come once tax cuts become law have not been able to rock the ten year treasuries from around the 2.40 yield area but that’s the importance of understanding a range bound market from a trending market. It’s really the first place to start in analyzing all markets. What is trending in the bond space is still the yield curve flattening observed the past few weeks.
A number of important reports will hit the tape this week. The PMI services index and the ISM non-manufacturing index are both on tap tomorrow. Later in week we have the unemployment and consumer sentiment on Friday morning.
Please call to discuss opportunities any of these markets.