Tuesday Surprise

8:40am EDT: I actually just fell out of bed about 30 minutes ago and was a bit surprised to see the SPX scrape the 990 mark. Participation in today’s sell off has been muted however, especially compared with the buying pressure we saw at late. Call me paranoid but this thing looks completely engineered, and I don’t see candles that would reflect panic selling. The big boys sold into the spikes, that’s for sure.

Okay, this is a possibility only – but I wanted to throw it out for you rats: Last night’s head fake could have been the {b} wave of an a-b-c correction – which could mean that we are basically done here or will be around 990.

Or the entire move down thus far was only the {a} wave and we’ll drop into 980s after an EOD rally. The leg down today counts really miserably (and usually I don’t even bother counting on sub-Minute degree), so I frankly don’t know. Breadth readings on the SPX are around 5:1 negative – pretty bearish, yes – but nothing that would indicate to me that we must drop further from here.

My recommendation would be to take partial profits here and keep maybe 30% of your puts in the game as play money. A seventeen handle drop since last night’s close isn’t too shabby. BTW, today’s POMO auction was pretty small – only $2.7 Billion were accepted – just FYI.