Earlier in the day we discussed movement in MBS prices that brought 4.5's to their lowest levels of the session, but we mentioned some support for MBS as well as some support for tsy yields that had been weakening at the same time.  By closing time, those ranges identified much earlier in the day held up, carrying us into tomorrow, a data-free options expirations Friday with little to no suggestion for directionality.

Turns out that 101-21 was a pretty solid area for 4.5 support.  And in 10's, despite a couple exploratory movements toward 3.36, 10's finished in better territory vs. their support.  Volume was evenly distributed and nothing to write home about as we were mostly on par with yesterday's levels. To reiterate the sense of uncertainty going into tomorrow, today did nothing to alter the course of the longer term trends.

Sorry about leaving the uptrend out of MBS...  It's not that it doesn't exist, just that it didn't come into play today.  With the collision of tsy yields to both the horizontal resistance at 3.31 and the trend of gradually higher lows, we should get a read on which of the two matter more over the next few days.  If yields move higher tomorrow, MOVEMENT of yield gets the nod, but relatively unchanged and up to 3bps lower and 3.31 would ssteal some significance from other technical stops.

In fact, we're pretty inclined to lean toward 3.31 being a touch layer of resistance in lieu of some game changing data.  Reason?  It coincides with the long term triple top we've been tracking for a while now in futures at 119-29.  Like we said yesterday, the bond market has shown us THREE TIMES NOW that it can approach 119-29 from around a 117-00 price level, in a relatively range-bound trend channel and FAIL to break through on all three occasions.

Ah, but there's the rub!  Even yesterday, after futures were defeated at the gates of 119-29, we suggested we'd wait for Friday before making any serious decisions about whether or not this epic test of horizontal resistance would fail or be confirmed.  Even then, those two eventualities may not represent every option on the menu as we'd need at least decent volume to support the movement.  At this point, with options expirations tomorrow, it's unclear as to whether or not we'll get it. 

The bottom line is that when a key indicator like futures is having a hard time moving higher past resistance, AND that resistance happens to be the highest point for prices in over 5 months, AND prices have rallied for about a month, AND current prices are just over an eighth of a point away from said resistance, AND similarly "testy" patterns are seen in MBS and tsy's, AND stocks failed to be convincingly dissuaded by their recent run-in with resistance, the whole enchilada in terms of a profitable long-term hedging strategy--to us anyway--smells quite a bit like a lock bias.

Ah, but there's some more rub!  Have stocks really fought off the urge to move lower upon meeting resistance at 1100 in the S and P?  Indeed it looked for a few days as if the mighty price level fell victim to the juggernaut-esque steamroller that is the stock rally.  But today saw the index fall back below the technical shelf and fail to mount any meaningful push back into enemy territory...

At market close today, we're barely a point off the week's opening levels in the S&P.  Whether you want to chalk this up to an actual "presence of a negative" for stocks, or simply the "absence of sufficient positive" doesn't matter much.  At the end of the day, info gleaned from recent movement in broad-based equities indeces do little, if anything, to bring tomorrow's picture into focus.  There is at least one encouraging bit of trivia to notice in the longer term stock chart...

And in the true spirit of trivia, we'll open this up to you, the audience, to submit guesses (or certainties as the case may be) in the comments section of this or even the AM post...  Here are a few hints...

1. It's a technical signal that exists regardless of the price levels, the knowledge that we're looking at S&P, the dates, or any impending events or fundamental perceptions about the market.  In other words, it's true technical analysis. 
2. That said, the mystery conclusion would likely be generally supportive of bonds.  In other words, knowing that the chart is of the S&P allows me to give you this hint in that we're looking for a technical indication that would be bearish for stocks and potentially bullish for bonds.  In other words, what about the chart above suggests to you that this rally cycle may not have the same set of legs as recent cycles?
3. Even #'s 1 and 2 give away too much, but in case light bulbs and alarms aren't dominating the sights and sounds of your environment at the moment, one last clue.  Simply put, the indication I'm looking for has nothing to do with the breakout to the downside of the range.

That said, the downside breakout, in a very abstruse and roundabout way could contribute to a similar conclusion.  So if anyone comes up with that answer, there will be bonus points for sure.  But really only as a safety net as I wouldn't expect even someone significantly more educated on techs than myself to necessarily see the same signs.  That said, jump on in!  There are no wrong answers in techs if you have a good reason for your stance.