A.M. Update

We've seen a fairly flat overnight session for US Index futures in front of the F_E_D, but after a lot of horrible macro economic data and nearly 2 weeks of consecutive declines in the Asian markets , a record stretching back to 2001, yesterday's PBoC Injection of $500 bn CNY to 5 major Chinese banks for a 3 month period got the liquidity train to leave the station taking Asian stocks higher. The Shanghai Comp closed +.49%, Hang Seng +1% and Nikkei -.14%.

Some now think the PBoC may have been acting in advance of the long "Golden Week" holiday in early October, anticipating rising cash demands. In any case, this isn't a large sum compared to the trillion CNY in loans created by Chinese banks every quarter and it has a 3 month shelf life.

Also of note as Europe trades mostly green at the moment is the German 2 year note issuance this morning of $3.34 billion Euros with enough demand to send the yield negative 7 basis points (yield =-.07%) , yes a negative yield and new record low whether that because traders think the ECB will change its charter and monetize sovereign debt and traders are trying to front run such an event (although I doubt German debt would be the first they'd pick up) or more likely a flight to safety trade is on and willing to pay to keep money out of the market and in the safety of German Bunds, with a negative yield, you are paying for someone else to use your money!

The main event of course is the F_E_D and Jon Hilsenrath of the WSJ (unofficial F_E_D mouthpiece) who created a little dust up yesterday in the markets saying the F_E_D would NOT remove the "Considerable time " language, backs away from that today saying it was a best guess and only those in the room know.

As ALWAYS, beware the F_E_D / F_O_M_C knee jerk reaction just after the policy announcement, sometimes lasting days. This almost always happens and is almost always faded, but it may be useful in some entries depending on the outcome of the policy statement at 2:00 p.m. EDT and the Yellen press conference at 2:30 in which she is likely to come off more dovish no matter what the policy statement says, so prepare for two possible  knee jerk reactions.

Finally I wanted to show you something quickly as I had mentioned Monday night that 47% of the NASDAQ Composite stocks are down at least 20% or more, a technical bear market for those stocks with the average decline off the highs being -24%. The Russell 2000 has about 40% of its stocks in a technical bear market with declines of more than 20%, with an average of -22%.

I have talked a lot in terms of the market being like a pier over water in which we stroll on and look at how well it's doing, how high it is, but below the surface the pilings that support the pier have been rotted away, creating an inherently unstable structure.

3C has shown us this process for a long time, it takes time for stocks to distribute in to higher prices and then top and roll over to the point that they are down around -24% and nearly half of them, but Market Breadth shows us this in hard factual numbers.

For instance, when a majority of stocks are above their 40-day (like a 50-day ) moving average, you are likely in a bull market and the averages should reflect that. Take PCLN...

 To the left PCLN is clearly in a bull market, above its 40-day moving average and making higher lows and highs, but looking at it now, it is below it's 40-day, but only down about 14% off its 2014 highs, the stocks above are well over -20% meaning they have moved to stage 4 decline while PCLN is close, it's more appropriate to consider it a stage 3 top, but it clearly doesn't have the ability to support higher prices as it did in 2013, which is what 47% of NASDAQ stocks are doing or actually much worse and 40% of Russell 2000 stocks. This is why I keep reffering to the market as a high pier with rotted pilings.

When looking at the Percentage of all NYSE stocks Trading Above their 40-day Moving Average, the higher lows have stopped and the average highs of 75% have disappeared, yet the market (the SP-500 in red) looks very different, as would the NASDAQ Composite, they look different on top of the pier than they do below, but these breadth readings are reality.

I found something interesting yesterday as we consider High Yield Credit traders to be some of the smartest money out there. Take the same indicator and replace the SPX as the comparison symbol in put in High Yield Credit and see what you get...

The Percentage of stocks > 40-day moving average and HY Credit or smart money move almost in tandem, what does that tell you about the long distribution process we have seen, the ugly indicator readings and nearly half of the market in NASDAQ and Russell in an over 20% down bear market right now?

It tells me that the high and shiny pier we are standing on is not as stable as it looks and really is a marvel of F_E_D engineering, but the F_E_D engineers are backing out of taking care of this market,  smart money has known that, this is why we have seen distribution for so long, this is why nearly half of those two averages, making up a large percentage of the market are already in bear markets.

The F_E_D is important today near term, but the course has been set already, don't pretend it hasn't because the SPX hits 2000 or the Dow hits a new high, we are nearing a majority of stocks that disagree. The age old question, is it a stock market or a market of stocks? Ultimately the market of stocks wins.