A.M. Update

Good morning.

Yesterday we saw some pretty intense intraday round-tripping volatility in the market (The Dow was given as an example), this is hardly the only market in which volatility is rising.

Just 3 days ago China/Shanghai Comp. saw the biggest drop in 7 years, amazingly traders have a very short memory and very high hopes for Central Bank intervention. The Shanghai Comp closed its overnight session at a gain of +4.74%, the largest 1-day gain since October 2009 on news that the PBoC was essentially providing stealth QE to two Chinese banks.

The Nikkei closed down -.49% after the BOJ stood pat on any QE or rate policy changes. The Yen gained against the $USD, sending USD/JPY lower.

While it looks like there are early signs of a turn around to the upside in USD/JPY, I don't think we are close to it judging by the $USDX and Ten futures, maybe later in the day.

The BOJ lowered their CPI forecast from 1.7% to 1% based on oil prices, although crude gained overnight as did Natural gas, presumably on weather expected Friday in the US (cold snap).

30 year yields are pushing toward record-er lows.

Perhaps the most interesting news overnight though came from the ECB's Nowotny who warned that while tomorrow's ECB meeting may be interesting we "Shouldn't get over-excited about it".

I've seen so many forecasts of what could happen, with almost everyone expecting some sort of QE announced, from sell the news, to a pop higher , but what if Draghi doesn't have the consensus and the ECB disappoints? I'd say watch out below.

However I believe our divergence of the last several days has been waiting for the ECB to fire.

Speaking of which, unlike yesterday, we don't have strong early signals but what we do have looks like this...

 ES 1 min has a slight positive in to the open after losing ground overnight...

 The 7 min charts like yesterday are still in line, but...

Like yesterday as well, the 5 min charts continue to degrade, not enough to make it to the 7 min charts and really start to press probabilities, but again, there are numerous small signs of deterioration yesterday and overnight, we'll see if they continue today. I suspect this is just stalling until the ECB less than 24 hours from now, but as usual, we'll let the market give us the final word on strong probability signals and take appropriate action.