A.M. Update

Index futures look a little different since opening Sunday night with initial weakness, a flat range until about 2 a.m. this morning and in to the European open as they slowly drifted higher just about to Friday's close.

Overnight Chinese data, especially Industrial Production was weak, most Asian markets had a soft tone that seemed to be a carry-over from the US's Friday session.  However as mentioned, China had a lot of weak economic data points.  Chinese Industrial Production came in at 6.9% Y.O.Y. vs. consensus of 8.8%. Chinese Retail Sales misses at 11.9 for August Y.O.Y. vs. consensus of 12.1. FAI Investment slipped to 16.5% YTD vs 16.9%.

It seems the data was reflected in overall weakness in growth commodities like Brent Crude and Copper, both slipping overnight with Crude having reversed some of those losses and Copper trying.. Also an apparent reaction to the weaker Chinese data was the $AUD slipping to 5+ month lows vs the $USD. The crude gains early in to the open look like a reflection of some FX moves from 9-9:15.

The USD/JPY had been in a flat, if not choppy range since last Friday, then plunged this morning around 9:15.

AUD/JPY looks to have correlated with ES/ Index futures around 2 a.m. until the cash open when Futures hit a soft spot, setting off quite a few alerts in NFLX, the NASDAQ Biotechs (IBB) and PCLN on the downside.

In the US the two big data points for today were The Empire State Manufacturing Survey at 8:30 a.m. and Industrial Production at 9:15 a.m.

The Empire F_E_D printed at 5 year highs, but as always the devil is in the details with unemployment at the worst since December of 2013. The workweek hours were down for August, Cap-Ex spending was down, New Orders just barely moved higher, but Prices Received popped much higher. Oddly last month's Empire F_E_D saw the biggest drop in 2 years to hit 4 month lows, today's print at 27.5, blowing away consensus at 15.71 which is the highest since Oct. of 2009 seemed as if it might have a few "Seasonal Adjustments"?

Then came Industrial Production for the US at 9:15 following China's ugly IP data overnight, the US IP saw the biggest drop since January coming in at - 0.1 for August, missing consensus of an expected +.28%. Capacity Utilization fell to 78.8%, lowest since February. Almost entirely manufacturing driven weakness (down .4% M.O.M-worst since January). This being the worst print since January's "weather related" fiasco on the back of Chinese Production at the worst in 6 years with the US missing, one must wonder a little about which information to give more weight, the F_E_D manufacturing SURVEY or Industrial Production's HARD numbers this morning? All with the backdrop of Global GDP's hovering around cycle lows.

Today also marks the first day of trade with the new CME rules in effect against "Disruptive Practices". One might wonder if the tame overnight session was because algos weren't quite sure what to do with themselves being everything they usually do has been banned on the CME, quote stuffing, vanishing orders, etc. According to the rules,  you now have to place an order you actually have intent of carrying out, what a novel concept, I wonder why the CME didn't think of this before?

We have the Scottish Independence vote Thursday with several polls all over the place over the weekend, Sunday's Telegraph had the yes vote at 54%, the second poll with the Yes vote ahead since the YouGov poll last week, however several others shows the No vote ahead by varying margins, we'll find out Thursday, but Spain's Catalonia region is already making noises on El Mundo over the weekend with the leader of a separatist party calling on Catalonian president Artur Mas to hold a referendum despite it being illegal, sometime in November so a Scottish Yes on Thursday would likely embolden the Catalonian region which Spain refuses to accept any such vote as being legal.

Wednesday of course the F_E_D / F_O_M_C takes center stage at 2 p.m. There's a lot of market concern that the forward guidance for zero rates after the last QE purchase (the "Considerable Time" phrase) may be altered, a "tweak" to guidance if you will. My opinion doesn't matter, but I happen to agree.

The market will be VERY interested in the 2017 forecast and the DOTS of where members see interest rates.  At 2:30 Yellen gives another droning press conference.

On Wednesday we also get the release of the last BOE policy meeting's minutes..

And on Friday, QUAD witching...

For now, as you saw Friday hopefully, Breadth has collapsed again horribly both on a 1-day basis and trend basis so I still expect some1-day oversold (breadth) reaction or pop to the upside, however I don't think the trend will get any better, it peaked around the time the SPX hit 2000 and has been in decline to 15-18 day lows since until Friday in which the floor fell out. 

In other words, the market is an extremely hollow shell up here.

I'll have early indications up soon, but I still have the same focus as last week, adding new or add to positions that look ready as they come in. I doubt I have to make a case for why, especially if you caught Friday's post on top of everything we have seen since July 1st, right after Window Dressing concluded.