In news that shouldn’t have surprised any of our readers, Japan has officially dipped back into a recession.  The Nikkei 225 futures plunged 680 points (3.8%), but is still treating the yellow .886 as support.

USDJPY dropped from 117.04 to 115.44 (1.4%.)   The e-minis responded by dropping as many as 14 points from Friday’s close before the BOJ jammed the USDJPY back into the rising wedge it has been in since Nov 9, and presto! ES is back to a more acceptable 5-point drop.

Otherwise, nothing much has changed over the weekend.  The US dollar stopped just shy of the .886 we’ve been watching: 88.365 v 88.477.  And, the SMA10 for SPX is a tad higher post Friday: 2031.20.  I think there is an excellent chance SPX will dip down and tag it today in order to quell the (quite accurate) criticism that the market is behaving irrationally.

In fact, I wouldn’t be surprised to see it dip at least a little lower, perhaps 2028.  This will complete a H&S pattern (the red neckline) and, since it will produce a lower low, will also run quite a few stops.

GLTA.