The downturn we called for last week has exceeded our expectations — the most bullish target proposed on Dec 31.  Why?

Stocks can handle the troublesome economic news and sketchy geopolitical developments out of the euro zone.  They can even handle lower crude prices.  But a USDJPY that’s — again! — back below the key .618 we’ve been watching?  No way.

The futures are currently down almost 10 points, which points to a retest of Friday’s lows at the very least.  Beyond that, we have to wonder whether USDJPY will remain in its rising channel.  The line in the sand looks like 119.07.

TNX continues settling toward our Dec 31 target.

And, crude light is closing in on its next target.

continued for members…

A failure to snap back above 120.11 at this point would be troubling to the bulls case, and most likely result in a dip to support at 2038 or 2019.  The channel picture is a mess at present, so we’ll stick with Fibs, daily moving averages and the white TL off the Dec 16 lows.

As such, I’m looking for an initial bounce at the red .618 at 2038 (also just below the SMA50), followed by a dip to the white TL mentioned above (2018.78 if it happens today or tomorrow, otherwise 2030.)

The dollar is showing plenty of strength, shooting up past the .382 (adjusted for contract change.)

It’s all on the back of the euro’s weakness — which does nothing for the yen carry trade crowd.  The EURUSD briefly dipped below its Jun 2010 lows this morning.

UPDATE:  1:30 PM

SPX just tagged 2019.28, very close to our 2018.78 target.  We should get a nice bounce here.

CL hasn’t quite reached the .786.  A bounce in CL would support a more significant rebound in stocks.  A little more downside to 49.52 would help SPX with a more precise tag of the .618 at 2018.78.