I continue to strongly believe the near-term trend trajectory of mortgage interest rates is now completely dependent on trading action in the stock markets. It will almost certainly be an event that provides the momentum necessary to push mortgage interest rates to lower levels -- rather than anything on the balance of this month's economic calendar.
From a technical perspective it appears to me that both the DOW and the NASDAQ are on the verge of staging a fairly sharp downward correction. In my judgment the DOW will likely continue to slide lower into the 11000 to 10900 range before mounting a little counter-trend rally -- while the NASDAQ will likely bounce off of support in the neighborhood of 2450.
The probabilities are high that the little counter-trend rally that is projected for the DOW and the NASDAQ will occur by Wednesday or Thursday. If so, look for this event to push mortgage interest rates fractionally higher for a few days.
Here's where things get interesting.
If the DOW and NASDAQ rally and close above their previous respective highs of 11154 and 2517 - the upward pressure on mortgage interest rates will intensify considerably.
On the other hand, if both indexes rally but fail to take out their previous highs before turning lower - it will be a very positive development for the prospects of steady to fractionally lower rates ahead.
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