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MBS Day Ahead: Beware The (Ongoing) Bounce

Posted To: MBS Commentary

Fancy chart overlays and technical studies are frustrating in the sense that they give us another angle to understand and discuss market movement, but they fall far short of reliably predicting the future. Spoiler alert: that holy grail won't ever exist when it comes to legally tradeable, publicly available market insight because, if it did exist, word would get out, the trade would become crowded, and it would no longer be a money maker. But let's forget I said all that so I can sell you a bit of this snake oil. It's like taking elderberry extract when you think you might be getting sick. If you don't get sick, was it the elderberry? Will you ever know? Same story with momentum technicals in the bond market. Both shorter and longer-term momentum technicals hit overbought levels...(read more)