Cyndee...Sorry to make your head spin.  Thanks for the congrats and comments.

Brian...Glad to see you weighed in quickly on this one.  I was looking forward to your input, as I always do.  I also watch the other economic reports, but love technicals as well.  This just looked like a "perfect storm" for creating price improvements.

Missy...God is always in control, so it doesn't matter what I blog about.  Thanks for the comment.

Lisa...I believe that we will see at least a testing of the interest rates we saw as lows back in March.  I would not be surprised if we see even lower, but I doubt we will see those of 2003.  Thanks for the input.

Gena...It would be welcome news for all homeowners and buyers.  Thanks for the comment.

Bob...Thanks for the input.  Technicals play a huge role in forecasting direction as patterns tend to repeat themselves.  The only question here is which side will break.  Almost all indicators will be to the plus side, so lower rates would be the result.  One factor besides the Fed that needs to be played in is the auction of the 10-Year T-Notes today.  If it is met with little foreign participation, that would be bad news.

Regarding Wall Street, Technical Analysis plays a big role in stocks as well.  I believe that the recent runup will need a correction period, but I would not say it is overvalued.  Some stocks are, but not all.  Regarding housing, there are still "hot pockets" where they are still seeing runups in prices, so the overall market is basically back to its normal range.  There are definitely places that are "drying up", but there are also places that are "heating up".  The housing market alone will not pressure the Fed either way, instead they will focus on other factors.

Tom...Falling dollar does shed some light on our overall economy and plays a role in which direction bonds will go.  Thanks for the input.

Frank...Thanks for the input.  You can see a clear trading range which would show bonds staying put for a while, bouncing between the various Moving Averages.  But, you have to factor in the Trend Lines.  The upward Trend Line will act as a rising layer of support, pushing bonds higher.  Conversely, the downward Trend Line will act as resistance pushing bonds lower.  One Trend has to break and will allow the other Trend Line to take over.

Thanks again for all the comments.

Robert K....Thanks for your comment and opinion.  Two things you failed to see. 

Number 1, this chart is not of the Feds rate.  The Fed looks at inflationary pressures and adjusts rate based on data to attempt to keep inflation in check.  I mentioned that I do not expect the Fed to lower rates tomorrow nor the very near future, but possibly before the year is out and that will be part of the Policy Statement.

Number 2, Trend Indicators point the direction of the Trend.  There is no manipulating them.  Upward Trend Lines show an increasing pattern along the bases of increasing prices.  The reverse is true for Downward Trend Lines.  That's it plain and simple.  Sometimes they form patterns like the triangle above.  When the two converge, simply put, one must break and that is the purpose of this post. 

The chart is of the FNMA 5.5% bond, and it is the basis of mortgage pricing, which translates to rates.  The purpose of the post is to show that there will be a breakout to one side or the other from the current pattern.  To which side is the question.  To that end, the latest economic data favors higher prices, equalling lower yields, translating to lower rates on mortgages.  The opposite could happen as well.

I am not sure why you stated "Lenders hurting for business see a rate drop in the tea leaves", but rest assured that I am not hurting for business and I don't use tea leaves, just technical analysis and economic data.

We all have our opinions, and I would like to thank you for adding yours.

Esko...You are welcome and thank you for the comment.

Tracy...Thanks for the comment as well.

Robert K...Apology accepted.  We all have been guilty of writing things down that come out the wrong way.  I know there are many who have been saying rates will come down for a long time.  These people fail to watch the entire market and economic reports, or as you put it, are blind to all factors except what they want to see. 

Bernanke makes many statements, especially in regards to the 1-2% "target" he wants to see, and right now we are just outside that target.  We haven't been that close in a long time, which is why I say that the indications favor lower interest rates as inflationary pressures seem to be falling into balance.  That is also why I mentioned that the Policy Statement will likely change tone and may indicate a possibility of cutting rates later this year.  If that occurs, bonds will go higher, which is what I expect to happen soon. 

Thanks again for your comments and addition.  It is truly appreciated to see everyone's inputs.

Neal...The real estate market is like every other market.  It needs a correction every now and then, and that is what I believe we are in.  The market will return to its normal pattern in the future, the only question is when. 

If you look back to the early 90s, you will see the national average of home prices went through a slight decline for a fews years, then returned to its normal rise.  It does not act like the stock market as it is not the same as a "security" or other investments.  A home really is not an investment, but that is another story.

Thanks for the comment.

Robert K...Again, thanks for your inputs.  Gas is no longer rising at the moment, in fact at my local pumps, I have seen a drop of at least 5 cents recently.  I know that is no necessarily the case across the nation, but you must remember that energy and food prices are very volatile and that is why the core reports remove them.  Both core and non-core reports are used, but the core reports give a more "stable" picture.

As you said, time will tell, but history also tends to repeat itself as everything is cyclical.  This may very well be more of a correction in the real estate market, but using past history usually helps to give an idea of the future, but does not guarantee results.

I hope what I see is correct, but if not, oh well, life continues and we deal with what is delivered to us.

Well, the FOMC Meeting made its announcement...

As expected, the Fed did not change the Fed Funds Rate, however the wording of the Policy Statement, the part that I informed you would drive the market direction, was not favorable for bonds, so it appears that the "falling" part of this equation will be prices instead of rates. 

As Robert Kerr stated, he did not feel as optimistic as I did and, unfortunately, his view won today.  The technicals will still hold, only that bonds will likely break to the downside regarding prices and rates will likely increase slightly on mortgages in the near future, so LOCK your rates now.

View the report here...

I disagree with the Feds assessment, but I am not an expert in the economy, so my opinion ain't worth squat.  I still believe that inflationary pressures will continue to balance out and will have the Feds changing gears later.

That being said, Bonds dropped dramatically after the news, but are still sitting on their Upward Trend Line.  If it holds, the triangle remains in place and there is still hope.  The next few days will tell as Retail Sales comes out this Friday and that tends to be a big mover of the markets as well.

Jason...I agree and the two styles must show something positive, right?