Did the market throw you a curve ball at all today?  As NFP approaches, little else makes logical sense besides assuming the range-trade is in force.   But suggestions emerge in the charts at times that may make it seem like something else is going on.  For instance, over the last two day's, tsy's have set progressively higher yields making the movements seem almost directionally worse...  No help on that analysis from stocks as they indeed hold their range in recent weeks without that same sort of directional movement.  But remember, there's more to the range trade than merely two price levels playing a proverbial game of pong.

Looking more closely at that "range-holding" in stocks, we the the S&P little changed since rallying yesterday morning.  Yet tsy yields have steadily climbed.  Yesterday, the top of the range was 3.28, and today it's 3.31?  What gives?  It's as simple as this: there are numerous "rungs" on the ladder that represent various levels of technical significance.  Some are stronger than others, some more frequently visited, some are very noticeable but rarely used.  So we must do our best to identify the more pertinent levels while still acknowledging the importance of some of those secondary rungs. 

The levels that are more easily broken and "danced around" are seen on chart's like yesterday's with various ceiling/floor combos that were recently broken to the downside, only to be broken to the upside days later.  Even so, the fact that yields are moving between them in relatively predictable technical pattern is most useful inasmuch as it is just another piece of evidence that markets lack guidance ahead of significant data.  But the bigger stopping points show us they still have what it takes to put on a good show.

So as stocks do a good job of visually representing a lack of guidance in their sideways movement, tsy's do the same thing by their directional movement, but with noticeably technical patterns.  What do I mean by "technical patterns?"  Look for peaks and valleys to coincide along the same imaginary straight line, usually horizontal, but occasionally sloped.  In your mind's eye, see that once yields moved above 3.27 yesterday, they were unable to improve since, despite 2 immediate bounces yesterday and a big one today.

In the next chart you can see the role 3.31 has played recently. You may also be able to see a tightening range in stocks.  Sort of a "honing in" on those annual highs as if to say :"ok, we're just going to coast to a halt right here and wait for that NFP tornado to suggest our next course of action."

MBS were extremely well-behaved with their techs today as well.  I wish the crystal ball could have been relied on with 100% certainty folks, because we could all get some more time off.   After the bounce off 102-00 at 11AM, we said that despite falling prices, to stay steadfast in your trust of the range, at least until it gives you reason not to trust it.  This was and sometimes still is one of the hardest things for me personally to simply "have faith in."  I know how counterintuitive it may seem to hold off on locks for "range trading" reasons.  And sometimes, the intuition will be right as well!  But for the most part, ever since we began discussing the range lo these many many months ago, trusting the range has been the winning bet.  And so it was that 102-00 did us up a solid today:

Longer term, that level is suggested as a previous ceiling.

Votes for continuance of range-bound behavior are seen in futures as well, with the levels discussed yesterday confirming their bearish suggestion.  But confirmation can't  REALLY be had until NFP hits and the volatility subsides.

Even though futures did hit the ceiling discussed yesterday at 38% retrace, the ascending red line of higher highs is just as well-supported a trend.  So tomorrow it has it's chance to hold up as a floor, thus suggesting the only thing that can be suggested: technical price levels abound within the broader range trade.  And just when it looks like behavior may be deviating from recent trends, we adjust the frame to find that the best advice remains : continue to play the range until the range plays you.  Whether you're playing the bigger more absolute ranges or the shorter stuff will depend on your clients, your pipeline, your timeframe, and other individual considerations, but at least the market is doing a pretty good job of providing that "if/then" flow chart.

If nothing ridiculous is announced with tomorrow's tsy supply or econ data, THEN tomorrow's close will be another rewording of the same range-trade sentiments and conclude with 24 hours more relief of the impending clarity offered by Friday's NFP.