A.M Observations

Futures slid overnight and are down of  course as I'm sure you're aware of, but this wasn't because of a 16% drop in mortgage apps over the last 5 weeks, bringing the Home Purchase Apps Index near lows not seen since 1995. It wasn't the -16% m/o/m/ drop in Housing Starts, it was the very same thing we were looking out for yesterday...THE $USD/JPY.


Overnight the Yen gained in strength as once again the BOJ's intervention's half life is stunningly small, all USD/JPY gains from yesterday's BOJ expanded Lending Facilities, have been lost.

You really only need 1 chart....

 USD/JPY overnight with 3C in line on the decline and then a small relative positive divegrence just after $102 is broken giving a bounce.

Comparing the $USD/JPY (red and green bars) to ES (purple) on a 1 min chart, we see what we saw yesterday, the two are resuming their correlation, at least near term which still leaves this problem for the market...

ES has about a 70 point dislocation with the correlation, this is what I was talking about most of yesterday as far as what should control near term trade, we already know the Primary underlying trend is about as ugly as it gets and the next move we were expecting in our trend expectations over the last 2 weeks is a big move down at least to the SPX 200-day m.a.

TODAY AT 2 P.M. WE HAVE THE RELEASE OF THE F_E_D MINUTES FROM THE LATE JANUARY MEETING.

As always, beware the knee jerk reaction with anything F_E_D related, it's often strong, but often wrong, however I have a feeling these minutes will be less of an issue because of the outgoing leadership as well as several new voting members rotating in, what they talked about will still be important, but probably not as important as past minutes, that's 2 p.m. so watch for volatility around the release.