A.M. Observations

Good Morning. Today is the start of the 2-day F_O_M_C meeting, tomorrow at 2 p.m. is the policy announcement, some are leaning toward a Feb/March taper (as always) for reasons I mentioned yesterday morning and this morning's CPI data didn't help the Taper cause.

The headline Y/Y consensus was expected to be 1.3 and came in at 1.2. The F_E_D prefers the second set of numbers however, there the CPI Y/Y less food and Energy is 1.7% which is not that far off the 2% range they look for. While some think this is significant before the policy announcement, I see it as trivial.

As far as overnight action and what we have right now, obviously things were kind of flat, but it was the signals I was more interested in and they were interesting. Keep in mind the EUR/JPY is in shambles recently and looks toppy if it weren't for such a tight top, I'd say very toppy. A quick look at single currency futures reveals it's the Euro this morning that is having trouble and the Yen which is flat, yesterday we saw the Yen higher and the Euro flat in the a.m., either way, the pair is not supportive of the market.

ES is not interesting as it remains in line overnight so the others...

 NQ looked positive on the 1 min last night, it turned out to be a bit positive, but not a big move.

The 5 min chart has no changes of significance.

 TF/R2K I was more worried about with a 1 min negative divegrence which I usually don't pay attention to early in the overnight session as it changes a lot, but this kept deteriorating as seen above.

 And worse off, the 5 min chart kept deteriorating so today the IWM will be in focus as well as trade management.

Gold saw another one of these overnight slap-downs, but it has an interesting positive divegrence, I think it's time we took a closer look at gold and the miners again.

As for crude, it seems to be getting some legs under it after I anticipated a pullback and got a correction instead (same difference as they say).

So, once again, I'm going to be looking for reasons to stay in the positions we are in, if I can't find them, I'd rather move short term trading positions to cash or perhaps something else.

Off to work we go, may it be a good day.