Mortgage News & Advice

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I know you all appreciate my sarcasm and that’s why I’m so consistent with it.  Today will be more of a trading lesson than anything.  We have a very classic situation setting up here.  Take a look at the chart.

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Ok, this is a classic “box play” setup that I’ve written about in months past.  What’s happening on this chart?  The most important thing to notice is how tight the support and resistence is…  Look at how close R1 is to S1.  Notice how the Moving Averages are getting bunched up together within that range. 

The only thing you can get from this formation is that we’re going to see a break-out one way or the other.  We’re going to go substantially higher or substantially lower.  We don’t know how long we’ll be trading within the box itself, but we know once we breach it, there’s nothing to keep it from continuing in that direction. 

The Trade is this.  Put a buy-stop order 15 basis points above R2 and a sell-stop order at $99.  We know that if the prices get to either point they are likely to head further in that direction drastically.  Each order opposite serves as a stop-loss order for the other.  All you do is put the two orders in and just let it ride.

My prediction is for higher bond prices and lower mortgage rates over the next 12-18 months.  However, you never know when you’re going to get a bump in the road.  I would be prepared for anything these days.  Locking if you have a short-term timeframe is the wisest move right now.  If you’re not in a hurry, I think waiting is prudent.

Stay tuned.  More to come.

Barack Obama was elected as the next President of the United States last night.  This very important action for the financial markets gives us a perfect example to illustrate how the markets work.

Of course, everyone has this big idea that Barack Obama is going to be able to turn this country around in the blink of an eye and unfortunately, this will cause huge disappointment in the near future.  We’ll get to that in a second.

As of the market close yesterday, The Dow Jones Industrial Average was up 1500 straight points over a 3 day period and Mortgage Bonds were up over 100 basis points in just one day.  How come?  Everyone was already planning on Obama winning the election.  Remember, the markets are always “forward-looking”.  They price in tomorrows NEWS today.  That’s how it works.

Today, we’re seeing the Dow Jones trade 250 points lower.  This is what happens after all the buyers fill their positions and step back for a second.  They realize that it’s going to take a significant amount of time before the real impact of the new President can be felt.  So, they start scaling out of their positions and send the market lower.

This is good for Mortgage Bonds though.  In fact, this is where the majority of that money will go.  Just look at today’s Bond Chart.  Amazing two-day run.  Because of this, I recommend that you LOCK anything that’s anywhere near closing.  We’re trading above all 4 major moving averages.  This is historically an excellent time to take advantage of lower rates.

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Stay tuned.  More to come.

Today’s the day we’ve all been waiting for…  It’s time to get the evil man Bush out of office.  That will fix all of our problems. (Sarcasm)

The Financial Markets will be very light in activity and volume today because of the Election, but will pick up huge steam tomorrow after the results are finalized.

Personally, I think it will be closer than most anticipate, but I do agree with most polls that Obama is likely to win.  My prediction is that McCain will get over 200 electoral votes, but that Obama will have the 270 so quickly that it won’t matter by the time he gets there.

A quick look at the Mortgage Bond chart shows we’re up 47 basis points on the day, but with light volume this literally means nothing.  We could be up 100 on this volume and we wouldn’t see new rates posted. 

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Click HERE for the latest election info.  Stay tuned.  Much more to come.

With the Election only a few days away, there is a lot to consider for all Americans regarding Employment, Savings, Retirement, and for many Survival. 

The Polls are only estimates, but here they are…  Presidential Poll

There are also some very interesting stories developing in the Financial Markets.  Here are a few that I think are worth reading.

Oil Drops 33% in October

Detroit’s Economic Katrina

The future for Fannie Mae and Freddie Mac

Bank Failure #17

We saw a nice rally in the Stock Market last week, but were still down 14% in the month of October.  I guess we can call that a win?  Mortgage Bonds have been really struggling to gain any ground and that’s pretty alarming from where I sit.  There is no reason to sell bonds at this point, but the Market is always forward-looking and that’s what scares me about last weeks action.

Have no fear, however, with rates being cut and inflation out the window, we should see Mortgage Rates at least hold to their levels if not improve over the next year or two.  Home prices will likely be low during that period, so this still represents a great time to purchase a home.

Stay tuned.  Much more to come.  Have a great weekend.

The Federal Reserve has once again cut the Federal Funds rate by 0.5% down to 1.0%.  This is definitely a good thing for the economy and shouldn’t cause any inflation problems since we’re experiencing such extreme deflation right now. 

The Markets as usual acted wildly on the NEWS even though everyone was expecting a 0.5% cut.  Mortgage Bonds are at a very key level of support right now and it’s important that they stay above that level if rates are to remain in decent shape.  If we go below that level, we could see higher rates for a few weeks or even longer.

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Here are the key stories in the Financial Markets this morning:

GDP signals Recession

Economy Shrinks on Weak Spending

More Government Aid for Homeowners

Stay tuned.  More to come.

Another day of continued volatility today in the Equities and Bond Markets; Mortgage Bonds not excluded unfortunately.  We’re down 4 straight days by an amazing 200 basis points.  We probably didn’t move 200 basis points in Mortgage Bonds for years at a time in the past.

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Here are some of the top stories effecting the markets today:

Consumer Confidence hits all-time Low

Home Prices see another Record Plunge

Consumers Shaken by Economy

For now, I have to say it’s a bad time to lock unless you have a very short timeframe.  We should see higher bond prices in this type of environment and I think it’s only a matter of time before this Market-Wide liquidation will end.  Hold on to your hat, however, it’s going to be a wild ride.

Stay tuned.  More to come.