Risk Off?

It looks like one of those volatile days that bulls dread, the kind that gaps down and takes 6-days of longs out in one a.m. gap, which is actually one of the smaller events as far as gaps go, I've seen 2 months of longs taken out and not even in a bear market.

Overnight it appears the continued threat of more defaults in China as well as the tightening of freezing (ala Bear Stearns 2008) of credit conditions is spooking investors, thus the collateral in China for cash, copper is being sold off harshly on cash calls as banks hoard cash , they have plenty they just aren't lending (US 2008).

In addition the G-7 (no Russia) has warned Russia of "Grave Consequences" should this Sunday's Crimean referendum go through while the acting Ukrainian president has essentially given up Crimea to protect the vast eastern part of Ukraine that also has a high ethnic Russian population lest there be a break away of the entire East of Ukraine (east of Kiev), but they are mobilized.

There are other tensions flaring such as the NATO build up of jets in the area and Belarus asking Russia to host another 15 fighter jets.

However as we saw last night, China seems to be the real concern as evidenced by the AUD/JPY, but is this truly risk off and divergences run over? With HYG still positive, we'll see soon enough.

Here's a look at some select important futures.

 1 min AUD/JPY, but more importantly...

The China sensitive carry trade looks like there's a 5 min positive divegrence...

USD/JPY 1 min also a positive and...

ES in line right now, but the 5 min

Also with some sort of positive divegrence.

If I find the positives pick up I may take some gains off the table in puts if I'm convinced of a bounce that is imminent, otherwise I'll be managing existing shorts until there's a decent opportunity to enter new positions.