4/5 Morningline: Stocks and Bonds

The market today will decide whether to do the happy dance over Friday's employment numbers. They were released while the markets were closed for Good Friday, and today is the first chance outside of futures that traders will have a chance to express an opinion on those numbers in the only way that counts, hard cash.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
SPY $118.44
TLT $87.92

At 10:10 a.m. Eastern

The 20- and 30-year bonds issued by the U.S. Treasury (tracked by the exchange-traded fund TLT) declined sharply in price in price, opening today 1.1% below Thursday's close.

This is a big deal -- 1% is a large move for TLT, and such a price drop means that traders expect higher interest rates. I think the narrative most likely goes: Jobs were created, so the economy is recovery quickly, and the Federal Reserve will raise interest rates to avoid inflation -- so higher rates are ahead.

Higher interest rates have a tendency to squash stock prices unless overriden by other factors -- the fear vs. hope balance. Stocks (tracked by the etf SPY) put the needle a bit on the hope side, with prices trading a third of a percent above Thursday's close.

Today's fall is part of a longer-term move downward on the part of TLT. It began tracking lower on Feb. 8, and has steadily put in a series of lower highs and lower lows -- the classic definition of a dowtrend.

The stocks narrative, I think, goes like this: If the Fed is raising interest rates, they must expect business to pick up throughout the economy, and that means higher earnings per share and therefore higher stock prices.

Of course, a third of a percent is a fairly narrow page on which to write an epic narrative. But I suspect that's how the thinking goes.

The other broad potential influence on trading today is the pending home sales index released by the National Association of Realtors this morning. It came in about 8% above the consensus estimate. Higher for this indicator means there are more existing homes under purchase contracts that haven't closed yet. It's a leading indicator for housing markets.

Ahead today . . . other markets, my holdings, thoughts on the employment numbers, scans of forex, etfs and stocks for new signals, the watchlist, mediawatch and the almanac.

Definition: etf - an exchange traded fund. An etf tracks a group of stocks. It's like a mutual fund, except it can be traded any time the market is open.

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