Yen Shakeout

The plunge in the Yen overnight is what sent Stock futures lower, as some of you know we have been tracking some changes in the Yen the last few weeks from a solid downtrend (market positive) to a lateral trend (the market went lateral in the same area on increased volatility), today the Yen broke below that area, but is it a capitulation move? Even short term? I'm not sure, but there are signs the Yen may be about to make a run to the upside (market negative) and it doesn't really matter which pair, the AUD/JPY, EUR/JPY , USD/JPY...

Here's what I'm talking about as it does look like the Yen bottomed earlier today and on some of the largest volume since early February; it's not at all beyond the realm of possibility that was a capitulation move in the Carry trade, as a matter of fact, right at the NFP.

 The Yen vs the SPX, the correlation is clear, a falling Yen = a rising market, in yellow the Yen went sideways for the first time in a long time and today broke below on what may be a washout move, the volume was there for it and it was right on the NFP at 8:30.

Note the market chop/volatility during the Yen's sideways move, now imagine the Yen rallying, it's hard to imagine if you haven't seen what happens when a carry trade goes south, but suffice it to say, lot of momentum.

 Intraday the Yen vs the SPX, in white the correlation is as it should be, right now the correlation is off as the market typically falls on a rising yen, so this is another thing I'm watching closely.

 Here on the Yen Futures there are a series of 3C lower lows, that is downside confirmation of the Yen move, look at the recent move in 3C though as the Yen hit a bottom today

This would be the same as selling high or covering low.

 The FXY 5 min positive that started yesterday has grown.

It has now moved to the 10 min chart.

There may be more volatility than we expect very shortly, if it came down to it between a weekly op-ex pin and a carry trade going south on anyone who is still in, I'd bet on the Carry momentum which wouldn't be good for stocks. Whenever or whatever, something is happening here.