Shanghai Bounces

Overnight the main news was probably Chinese stocks bouncing with the Shanghai composite putting in its best gain of 2014 of +2.7% on the heels of news that China's domestic banks stopped selling trust products that were blamed for excessive risk taking and lax credit standards, we'll take a closer look at issues like FXP and see if the pullback has legs enough to consider an entry to get some Chinese exposure, but aluminum is still on the table.

There's also some rumors in China of possible stimulus to come so an FXP pullback may have some legs. Also helping the Shanghai Comp was the introduction of single stock futures trade.

Emerging Markets also have held up well since the F_O_M_C decision, but it's very hard to make much of that, they had a delayed effect on past decisions and they may just be in the middle of their own cycles.

US Index futures seemed to follow China's lead and bounced overnight with ES looking like this just before the open...

 ES 1 min

Strangely there was little correlation to AUD/JPY like yesterday overnight other than directionally, but it seems to have reconnected (thus far) as of 9 a.m. and into the N. American open, much like yesterday? Are they turning on these correlation algos at 9:30 and otherwise shutting them off?

Gold also bounced overnight significantly, we were looking at that yesterday, it looks to have helped out GDX call thus far.

The $USD did lose some ground so between the two it almost looks as if the F_E_D perception is changing, however Treasuries are still at depressed F_O_M_C policy announcement levels which is interesting and worth watching today.

We do have 4 F_E_D speakers on deck that may shed some light and sanity on Yellen's performance, they include: Fisher, Kocherlakota, Stein and Bullard.

Russian bank, Rossiya found out overnight that Mastercard and Visa stopped servicing their cards, coming a day after the S&P credit rating agency lowered Russia's rating, Putin's response was that he's be sending his paycheck to Bank Rossiya.


Remember today is Quad witching, the expiration of stock index futures, stock index options, stock options and single stock futures. 

Typically on an op-ex Friday we have a pin that hold the market in a range called max pain where the greatest dollar value of contracts will expire worthless and that pin holds until about 2 p.m. as mist contracts are wrapped up by then, however Quadruple Witching tends to be more volatile, but in many cases price action is somewhat meaningless as different expirations are pushed to expire worthless as retail mainly buys options while the Street sells them.

Still we typically get some of the best information for the week ahead the last 2 hours of the day, not from price movement which tends to have very low correlation with the following week's open, but 3C, 3C tends to pick-up right where it left off so we'll be looking closely at that.

There's surprisingly little, really no economic data on deck for release today.

VXX is moving toward the levels I said I was looking for Wednesday and yesterday so that should be of some interest and of course we'll keep an eye on HYG as the instigator and sponsor of this week's upside.