All eyes on the new home sales number this morning. Already the existing homes have dropped more than almost ever seen. Consensus is for a low number in the 400s down from the low 5’s prior, but if we get a really bad number in the 300s we could see another flush down to test further supports. I have a feeling we could see a bad number given the mortgage apps were down more than 27% in the period. The majority of mortgages are being given on new homes due to lots of “upside down” valuations in resales. Institutional trading has been interesting and may give a clue as to the big trader sentiment. They led the selling with relative volume and deltas yesterday and despite the overnight rally there is very little volume from them. Deltas from those participating are quite long but without the volume it means nothing. The Fed is expected to hold the bank rate at 0-25 so there is nothing really happening there. I think overall there is a lot of evidence that the recovery is not what many think it is. Jobs, homes, global debt, 10 year yields at a shocking 3.17, etc. Just a mess on many fronts. Flight to quality doesn’t even pay on the risk front. I think the market is sort of poised to react on any news. Kind of a feather blown around in the breeze. I would expect more of that which is why I think the homes number is so key today for a potential knee-jerk reaction and it can go either way. If we see a number in the mid 4s we may even rally hard. The other key item is the ever important 200 MA which all position traders are fixated on. Dipping below it is certainly bearish in the minds of a lot of those traders and that triggered some selling in the algos yesterday for sure. The levels are fairly straightforward today. The OH is weak though with the low volume selling tail above it so if it peeks out at all it will likely break and we should move fairly quickly back into the 1103 area. If we sell off I think all of our long fade levels are fairly strong. There is a lot of support down there in my view – at least enough for the half rotations we need. The 10’s and the Euro are flat so watch those for clues, and the carry trade is selling off quite sharply so that will settle in my initial bias to the short side.