At the end of trading today, the 10 yr note was up a full 100% more than 4.5 MBS!!!  Then again, that was only a 2 tick gain in the 10yr versus the 1 tick gain in MBS.  It's almost as if we ended up right where we began.  It's almost as if Friday's don't matter compared to the rest of the week.  In addition and as mentioned in the previous commentary, there was an almost perfectly ridiculous swath of price losses IMMEDIATELY following the noon hour.  Common common stuff and not at all the sort of thing to get excited about.  Anything on the horizon worthy of excitement?

Today tried to trick us into thinking it was exciting...

Yep, there are some decent losses in the middle of the day, beginning with a moderately dramatic spike, and weakening through the rest of the day until ending near opening levels.  Same story in tsy's....  But wait a minute....  Are those the highs of the day I see coinciding exactly with the noon hour?  <groans>  Look folks...  Fireside chat time...  When I first began encountering these types of almost-silly explanations for price movements, I didn't know quite what to make of them.  I thought that although there probably was some truth to the fact that Friday afternoons share certain characteristics, it couldn't possibly be that simple...  Markets are supposed to be driven by complex, intangible mechanisms, right?  Not always...  Sometimes things are really as simple as they seem:

Above, I took the liberty of encircling some Friday's and ensuing monday's up intil the noon hour.  Pretty crazy that most of our spikier lows seem to fall on Fridays...  Even crazier that 100% of recent friday's have been losers.  (yes, the most recent circle is skewed to thursday in order to pick up the true closing levels of thursday BEFORE the drop).  Notice one last item of craziness?  100% of the time, we've regained thursday's closing levels in the following week.  It's VERY important to remember that this WILL NOT always be the case, and the "100%" concepts are only possible because we are operating in a rally.  But that's just the point...  The FRIDAY cannot be used as a metric for determining the end of rallies. 

We can look at any manner of other indicators, both fundamental and technical to try to predict when that will occur.  But at the end of the day, I find that I can give the perception of intelligence more readily when we save the more convicted conclusions for the actual confirmation of trend reversals.  In other words, we could look at the length of the rally, for instance, and say "it has to end soon, right?!?!"  Or we could look at the intense band of resistance overhead from 100-26 to 101-00 and draw similar conclusions.  Indeed, these sorts of conclusions SHOULD inform a portion of your personal GUT-FLOP (read: hedge ratio), but "portion" is the key word.  The point in time where we can all be a lot smarter about the end of the current rally is when trends confirmed broken (my subjective rules: more than 3 ticks through the trend for 3 days).

So if you were to draw an imaginary line under the lowest points on the MBS chart (well, ok, i'll draw it for you...  see the TEAL), you can see that the trend is alive and well, not to mention the fact that it endured the inherent price drop of Class A settlement.  But the arrows of trend shifts fly swift and silent, and although we don't want to act prematurely in fear of them, we want to be ready for their eventual arrival.  Could it be Monday or some other day next week?  Sure...  It might even have been today (though volume suggests it's not).  Moreover, whenever the arrow would come given events that have transpired to date, one crazy headline over the weekend can change the whole schedule.  THAT'S why we're smarter when we wait for trends to be broken.  At times, that might make you feel like you're missing out on gains or losses here and there, but in the long run, it's a much more profitable strategy. 

Final support for the argument that ZERO decisions were made today?  The broadest measure of the equities market not only ended relatively flat, but EXACTLY on it's VWAP (volume weighted average price), which gives more weight to price levels that are traded in higher volume.  The concept that underlies the necessity of VWAP's has been around for well over a hundred years and has served well all those who realize it's importance.  In English?  Not only didn't stocks move today, but they REALLY didn't move today.   So if you lament the loss of weekday time working in an industry tied to a M-F schedule, go ahead and experiment with ducking out either early or altogether next Friday...  Maybe you win, maybe you lose, but at least you can rationalize it by saying "everyone else is doing it!"  Well, at least their money is...