A.M. Observations

If there wasn't enough tension in the Ukraine with the Crimean referendum  coming up this Sunday (it will be interesting to see if there is and how strong a risk off move may be near the close considering the referendum) as to whether to join the Russian Federation which is all but a formality at this point, the massive numbers of Russian troops on Ukraine's eastern border. Remember this is why acting Ukrainian president, likely under advice of the US gave up Crimea and would not defend it, this is so they can defend the much more important eastern border as losing the peninsula would be bad, but losing the eastern half of the country where there is a high percentage of ethnic Russians, would be catastrophic. Overnight in Donetsk clashes between anti-Moscow and Pro-Russian protestors turned violent killing one, which gave Russia the green light it has been looking for as the Russian Foreign Ministry responded by saying "Russia reserves the right to invade to protect ethnic Russians and Compatriots",  what is interesting though is the dead man is being claimed as an anti-Moscow protestor, but it doesn't matter, it's just a matter of time before  Putin finds a reason to take back the Eastern portion and then Kiev itself.

In other overnight developments, most of the JPY carry trades lost quite a bit of ground, USD/JPY among them taking the Nikkei down -3% at its close.

As suspected yesterday the half life of ECB rhetoric is as short as ever and EUR/USD is already starting to recover from yesterday's jaw-boning of the pair lower by Draghi and as suspected, the EUR/JPY had much better correlation with ES than USD/JPY or AUD/JPY.


As for the market, it still looks like a decent inverse H&S type base is completing...

You saw the divergences on the close last night, this is the SPY with a left shoulder and head, it just needs a right shoulder.

Considering it is an op-ex Friday (weekly) we should see the normal max pain pin until about 2 p.m. and then we get some good data, that would be perfect timing for the base to complete, but the Crimean referendum is definitely a risk off event on Sunday so that will be interesting even though John Kerry has a last minute meeting with his Russian counterpart to try to diffuse the Crimean annexation by Russia.

Meanwhile the EU is talking tough with possible Visa bans against a number of Putin allies and large business leaders like Gazprom's CEO, they sure know how to threaten Putin as he amasses tanks, APC's , destroyers inside Crimea and all along the Ukrainian border, they threaten Visa bans!!!

Well it's just a matter of 3C finishing up these bases, I'm still looking for VIX futures to pullback and accumulate which should be a good timing signal for the pivot from stage 3 top to stage 4 decline for the market.

More to come after the open.