No direct relationship with the Nikkei under normal circumstances, however, in a serious move or crisis, all markets will become more related (see: 1998).
There is no fear here my friend. Dow dropped 0.5% today hahahah fear you must have not noticed what real fear looks like in 2002 , where we dropped for 30 days continously day after day day after day day after day. till everybody has puked out their guts. This whimsical drop is nothing. Any real drop has to do another specific price action movement. I hope all the knife catchers start buying tomorrow. Buy when there is blood on the streets! Just remember to buy when there is more then a few drops, not just one drop of blood that just sorta slipped out from a nosebleed ok?
I agree the market seems to have shaken off its 4th quarter rally hat and selling in earnest has begun.
The only thing traders have to know is: How much risk am I taking entering here/tomorrow: X For how much reward : Y
Here is the reason as to why Japan is down today again (Livedoor fraud rumors). Not much to do with the US market: Tokyo's stock exchange closed early for the first time ever on Wednesday, as market bosses moved to prevent a feared shutdown of the trading system. The decision was sparked by heavy selling in shares following allegations of fraud at internet firm Livedoor. The exchange suspended trading in all shares at 1420 local time (0520 GMT), 20 minutes ahead of the usual close. Toyko's Nikkei 225 index closed down 464.77 points, or 2.94%, at 15,341.18 after a frantic day of trading. "The recent spike in orders is extraordinary," said Taizo Nishimuro, the head of the stock exchange. The number of transactions had threatened to exceed the exchange's computer system's capacity of 4.5 million trades per day. Livedoor managers have denied the company broke market rules by giving misleading information to shareholders.
US Bonds reaction to the Nikkei pullback was rather muted. I was expecting more. I suspect this is a sign of weakness ( looks toppy ) , we can expect Bonds to pullback if stocks should rally. My 0.02.