December retail sales beat estimates, coming in at 0.6% vs 0.4% expected. Ex-auto also beat at 0.4% vs 0.2% expected. YoY, the unadjusted print came in at 5.6% – well ahead of inflation.

Futures were already off and have added to their losses.  continued for members…

Note that ES has finally dropped through its SMA10 and 20 after we had a 10/20 cross a few days ago. The small H&S pattern offers a potential pullback target of 4712. The SMA50 should reach it in the next few sessions.

In many ways, stocks are waiting for VIX to signal it’s ok to drop any further. The key should be whether or not VIX can hold its SMA200.

On the currency front, EURUSD is approaching its SMA200 as expected. If it doesn’t bounce, stocks will suffer greatly.

USDJPY continues rising as expected.The combination has sent DXY through its SMA200 – a big negative for stocks if it continues. CL and RB are both off slightly because, well, everything is. Though the strong retail sales beat has sent the 10Y higher. A push through the SMA200 will add to stocks’ downside.

Stay tuned…