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MBS Day Ahead: Low Volume and Light Liquidity Expected. Here’s What That Means

Posted To: MBS Commentary

One of the hallmarks of classic (read: old school) technical analysis is the role of volume in confirming market movements. For instance, if 10yr yields break through a key technical level, the next question many traders will ask is whether or not it happened with strong volume. While this sounds pretty smart in principle, it’s trickier to apply to living, breathing markets. There are so many variables in play that it makes more sense to temper our enthusiasm for high volume moves a bit. Some of the curveballs are as follows: A high volume move could be due to a snowball of trading positions being forced through “stops” (stop-loss levels–automatic triggers to buy or sell based on certain conditions). For instance, if there are 10 buyers and sellers in an entire market for fidget…(read more)

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Source: MortgageNewsDaily

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