Not much to say that can't be said with a picture...

As you can see, the previously discussed 877-878 (ish) level in the S and P has indeed served as a bit of resistance for the time being.  However, the 870(ish) lows from this AM stymied the selling, forcing the index into a hotbox between those two bases.  Unclear at the moment whether they'll advance safely, or be "tagged out" as it were.  The latter is obviously preferable for the bond market.  But the basis (a quasi measure of spreads that does not factor in prepayment behavior which I'll sometimes reference due to the fact that there is no subjectivity involved and it's a more quickly observed number in times of intense volatility or change) blew out so heavily after the auction, that MBS have had plenty of room to rally despite a modicum of stagnation in tsy yields.  In plain english, MBS have closed the gap a bit to earlier tsy strength.  No significant level of profit taking has been seen, even though volume is high.  Keep in mind that Fannie and Freddie 30yr settlement begins tomorrow, and some idiosyncracies are warranted.  So to the same extent that you'd rejoice in the lack of profit taking as an unexpectedly pleasant surprise, also do not be surprised to see the idiosyncratic eventualities become unexpectedly negative as well.  As we continue to push into what are by far the highest MBS price levels in almost 2 months, "defense" remains utterly pertinent to long term profitability of your pipeline.  In other words, don't leave town for the rest of the week.