Tuesday Market Update -- It's All About FX

News:
September Vogue 2014's implications warned of a reboot. So far, the actual word seems to be reset. It has appeared in print a few times since last September. I just happened to hear Cramer utter it as well with regard to the dollar: "it's a huge reset for anyone doing business overseas."

For the record, I do not think the actual reset has happened yet.

Today it's all about currency moves...finally. The strong dollar is inflicting pain on earnings. In this context, this article from SocGen via Zero Hedge is a must read about how disorderly currency moves are telegraphing extreme global market volatility, as it always has:

When A Soaring Dollar "Reflects Loss Of Investor Confidence And Is Potentially Devastating"

By the way, Cramer just called the currency-induced overnight weakness "when the market acts stupid."

I have news for jocks like good Jim Cramer: the market is not acting stupid; the market is finally acting like a market and not a play pen for central bank-coddled babies.

Elsewhere, Citi is out with a note (also via Zero Hedge) that quotes an unnamed investor as saying, “zero rates may well in time come to be seen as deflationary”.

The deflation is already here, dude. We're just now seeing are the repercussions.

ES Futures:
Carnage overnight as Caterpillar's weak earnings get blamed on the strong dollar. But what I see is merely a potential 1:1 Fib move. This means a possible buy if things firm up.

FX:
Euro is ripping while the dollar is slipping -- right on time for blaming earnings on the strong dollar.

Bonds:
Yet again, volume in 10-year notes dwarfs the futures market overnight. I continue to be wary of this.

Energy:
Oil is trying to bounce yet again, but looking weak so far. However, there is a potentially bullish set up occurring if the January 13th lows hold.

Metals:
Gold's pullback looks choppy which suggests more upside is possible.

S&P Outlook:
2042.88 failed yesterday and it looked like the market could care less. Not today. Europe is down hard, and ES futures are down hard in sympathy. (CNBC keeps mentioning reset this morning.) I'm not certain it's just yet. I will be buying calls today against my long held UVXY position.

Specifically, I see a 1:1 Fib pattern around 2035. I would not want to see a close below the 2020 area, however.