Intra-Day Update: Chop Before We Drop?

UPDATE 10:12am EST: Nice gap down at the open but as I’m writing this we’re still holding at the 893 retracement level. Yen is a bit overbought, however there’s a chance it’ll do the snake wiggle around the 80% line on my hummingbird stochastic just like yesterday. Here’s a chart with the freshly baked retracement levels for you dirty rats – the faded out lines are the weekly ones.

My Latin phrase of the day: Cogito, ergo sum 😉

UPDATE 12:00pm EST: Not much happening on our end. Berk and I are scalping a few swings with FSLR and BIDU which so far has been working well in terms of reading the swings, but the MMs are being ‘difficult’ at best. Yen is getting closer to being oversold again, so maybe we’ll get some fireworks going into the afternoon.

UPDATE 12:07pm EST: Okay, I just discussed this with Berk – take a look at this correlation chart:

As you can see the market has NOT exploited a drop in the Yen. The stochastics on my favorite currency is pushing towards the oversold condition. So, what do you guys think will happen once the Yen starts swinging to the upside again? 😉

UPDATE 12:46pm EST: Yen is crawling upwards again, but we are not seeing a strong reaction in equities. Besides we are now at the 886 retracement level in the SPX. It is possible that we are looking at a low for the day – not sure yet. But I am distrustful of this tape right now – it feels a bit like a bear trap.

UPDATE 1:03pm EST: I’m so on today – have been reading this market like a book 🙂

UPDATE 2:07pm EST: I just grabbed a FSLR put and will cut it if we breach the 8740 pivot on the YM futures (around 903 on the SPX).

UPDATE 2:21pm EST: I just exited FSLR – to add insult to injury I got cheated by the MMs – LOL. Not a biggy – just lost a few bucks and the risk/benefit ratio was acceptable. Anyway, it seems at this point that wave {e} is on its way, unless we see a swing to the downside on the double.

UPDATE 3:13pm EST: It’s actually very important which way we swing at this point. IF we keep going down it is possible that we are tracing out a series of 1,2s and that Minuette wave (iii) of the current higher degree wave is not done yet. This would also mean that the triangle case is weakened and that we might get a very swift wave 3 to the downside. IF we swing to the upside by the close it would give extra credence to the idea that we’re doing the triangle. What’s so interesting about Berk’s wave 5 down scenario (which is the 1,2s down right now) is that it would hurt the most amount of people, as bears have most likely closed out their short positions by now. Here’s a chart – hope all this makes sense:

UPDATE Closing Bell: I’m going to grab lunch now and will follow up with a market update later this evening. I had a long chat with Berk and we think we have a decent idea on what the probabilities are. Hope none of you got whipsawed too much today.