A.M. Update

European markets are lower and red, US markets will open lower as well, the culprit, remember our call for a pullback in oil yesterday morning? After the close last night API oil inventories showed a build of 6.1 mm barrels last week, thus crude is trading down on the inventory news.

 Crude futures 1 min chart overnight

And one of several negative divergences we saw yesterday morning , this a 5 min crude chart.

As such, the Energy sector in Europe is lagging and keeping the major bourses in the red, which is what I expect today's US (at least opening) session will all be about as well, this is obviously tied specifically to the unintended consequences of the crude move higher.

Remember those commodity sensitive currencies I talked about last night as showing divergences? Well AUD/JPY and AUD/USD are lower, to Draghi's brief relief, EUR/USD is lower as we predicted last night in response to a pullback in oil.

Not even a surprise RRR  cut of .50 bps from the People's Bank of China this morning could turn things around, although it did give gold an area of support for the time.

For example...

Like AUD which is now sliding again after initially popping on the PBoC RRR cut as its very sensitive to Chine, Index Futures did the same...

 NQ futures overnight are easiest to see, the Chinese RRR cut at the green arrows popped things higher including AUD and Index futures, but they gave up the gains,  even with USD/JPY making gains, for now oil is the story and what the market is tracking, so much for the cheap gas narrative!

 The divergences seen last night on 5 min Index futures have started to move to the 7 min charts, above is ES 5 min...

This is ES 7 min so it will be interesting to see if that HYG divergence is signaling a bigger move lower in the markets.

We have the EIA petroleum report out this morning at 10:30, look for that to be a potential market mover, Bloomberg's estimate is for a 3.25 mm barrel build.

We have the important Non-Farm Payrolls Friday, if the ADP jobs report from this morning is any indication, than we'll see how the F_E_D spins this as we just heard from the CEO of Gallup that the unemployment rate was bunk as I think we all know.

The noisy ADP report that has beaten the last 4 weeks missed at 213k on consensus of 222k and last of 253 k (December revised up).

So we'll be watching to see where things go from here, but I think the HYG movement in the charts is one of the bigger developments. Obviously our call for an oil pullback yesterday morning is what the market is focussed on right now.