The tug-a-war continues with the Euro and 10s crowded trading leads the Spoos around by the nose. CPI was as expected with the real number minus food and energy a big net null. It may be too soon to tell if the flush is done for now but this morning we have net selling in the 10s once again and net buying in the Euro leading to a positive bias in the short run. The all important carry trade has also closed on highs and may be making the turn but honestly it is too soon to tell. The really important S/Rs today are 1098 on the short side and 19-20 and 29-30 of equal importance but too close to call on the long side. Interestingly yesterdays trading was net selling obviously but not drastically short delta favored with big traders. Overnight is just the opposite with very heavy volume and institutions HUGELY short favored. What is more concerning is big traders sold a ton before the morning turnaround, but have not taken the long side to any real degree. This makes me a bit more skeptical of this late session rally. It may be another fake out as I write I’m noticing a strong bid return to the 10s. I’m at the point of not caring really though as it is really for the best for us as it increases the volatility at the important levels making it easier to win even if you are wrong. As was true the last couple days we will just watch the Euro, the 10s, the VIX and the EUR/JPY cross for the money shifts along with order flow to decide at the last minute whether to fade or break at the key levels. On the long side there are some scalp ops all the way up but the real key fade levels we will look for are the OH which is tricky as it may fail anywhere from 17.75 to 19.5 and the 29-30 handle as well. We may get some action around the pivot at 27 or so as well. The OH is actually right at the beginning of the ON session which is why so wide. On the short side there really are no long opportunities until maybe the S1 which we would likely just scalp as there is no real volume set up there. The OL has a 1+ point range so the flow will show where it stops. I wouldn’t be surprised one bit if we flushed down though, but I think the 1098 handle has a good chance of holding and either way there will be lots of position buyers there which will create a swing large enough for us to sneak in and out. Don’t forget, that area is the center of a major volume cluster on the comp as well which adds to the probability of fade hold success. If 1098 breaks we will sit it out as there is no real volume info there except the craziness from the “silly session” as I call it. No thanks. There are also a couple potential break ops. The long one would be from 21.50 or so to as far as 26 and the short would be from 1102 down to 1099 or 1098.