Futures were all over the map following this morning’s jobs report.  ES spiked to 2077, plunged to 2068.50, then shot back 2073.50 where they look to open green by 1.50.  It was all courtesy of the USDJPY, which has now not only popped above the white .618 but backtested it as well.

The beat was so strong that it, again, raises the question of why ZIRP is still with us if jobs metrics are so important to the Fed.

The dollar continues toward our year-end target, solidly above the purple .886.  Likewise, 10 year notes. The EURUSD again came very close to our 1.2263 target, bottoming out at 1.2278 — probably close enough for anyone wanting to take a shot at a bounce but not quite there.

Balance of trade, barely mentioned anymore by the MSM, missed estimates of a bounce higher (less negative) clocking in at -$43.4 billion rather than the -$40.0 billion forecast by Briefing.com.  As we discussed two days ago [see: Update on Currencies], this is hardly a surprise given the USD’s strength.

Looking ahead for the day, SPX should continue to trade above the white 1.272 and VIX to test 11.91.  But, keep an eye out for Factory Orders at 10:00 EST and, especially, Consumer Credit at 2:00 EST.  And, as always, watch to see what happens with USDJPY and DX reaching important inflection points.

SPX opened up a few points and seems content to remain in the small purple acceleration channel that points directly at our year-end target of 2138-2142.

Intra-day, keep an eye on VIX and the previous low of 11.91.  If it slips below, we should expect new highs on SPX/ES.  In contrast, however, USDJPY and DX are bumping up against the top of their acceleration channels — meaning stocks might not get much more support before a reset.  So, traders might want to keep stops fairly tight and exercise caution with respect to long positions over the weekend.

With USDJPY overshooting the .618 to tag the channel top and a small scale 2.618, I wouldn’t be surprised to see its rally fizzle here and SPX drop back from 2077 to set up for some of that chop we’re expecting.  Any significant downside should be constrained to 2055 — as the SMA20 is about to cross the red TL connecting tops from the past several months.

Another hurdle for bulls: the ten year yields have bumped up against the SMA20 and SMA50.  They could, and probably will, punch through — but probably not today, unless the consumer credit number is huge.

Again, I think there will be many head fakes between now and Dec 31.  While swing traders should be safe holding long, traders are likely to get whipsawed six ways to Sunday as the mechanisms of the rally will, at times, strain credulity.