The China stock market has sold off 4.3% as the NY based Conference Board adjusted their China index gain from 1.7% down to 0.3% due to a “calculation error”. The overnight market activity is driven by flight to quality having no reward so a good deal of market participation is risk tied to that. Sort of reluctantly buying equities because they don’t know what else to do. If yields rise expect sell-offs to be more sustained. If they stay low, expect continued inflows to equities trying to time swings to squeeze out returns to compensate for lack of fixed income contribution to portfolios. The carry trade has reached an 8 year high as the Yen continues to strengthen against the Euro. The European markets are also down this morning. This whole sell-off may be a little overcooked, but that does not matter to us. What matters is that new volatility has been introduced to the markets and we’ll hopefully get the price movements we need for good trades today. The ES will need to climb through several strong areas today to close it’s 14+ point gap. Each rejection area could provide a nice rotation for a short fade trade. Below the OL, there is a large rejection area extending all the way down to 51.25. Anywhere between 51.25 and the OL (54.75) could provide a nice long fade trade. Keep the 10am Consumer Confidence report in mind.