With such weak employment figures this morning, the odds of a rate increase in June just plunged.  However, that information just killed the US dollar’s rally… …which, of course, killed the USDJPY.  Recall we were looking for a drop to 108.25 or even 107.79.  It’s currently on its way to 106.80.Needless to say, CL will have to rally a lot in order to prevent stocks from giving back this week’s gains.

continued for members…

ES is probably heading for the purple trend line at about 2090, which would put SPX around 2090 as well.But, again, it depends on how aggressively CL ramps.  If it can push back above the falling purple channel top at 49.26, they might be able to hold the drop to SPX 2095.SPX’s 60-min chart…UPDATE:  9:37 AM

SPX just reached the 2095 level.  Don’t see a bounce in CL or USDJPY yet.  Fine tuning the purple TL a little, looks more like 2092.12.FWIW, I see NKD potentially picking up support at 16330 or 16275.  Might provide a turning point for USDJPY and, therefore, SPX.UPDATE:  9:48 AM

SPX and ES just tagged their initial targets.  I’d play the bounce here with tight stops.  We’ll see if CL starts bouncing. UPDATE:  9:51 AM

Not holding.  Back to short.  Next support is 2087.34, 2085.10, and then 2082.  Remember, we’re watching for USDJPY to reach 106.80.  NKD has possibly bottomed at 16331, and might be going to 16277.UPDATE:  9:55 AM

Just a head fake.  Back to cash here until it settles on a direction.  I like the idea of a drop on down to backtest the neckline or 1.272 at 2079.  The red .618 at 2078.53 is also still appealing.  But, we know from the past two days that CL could swing into action at any time.UPDATE:  10:06 AM

USDJPY reached 106.80, though NKD looks like it could go just a little further.  ES coming up on the red channel backtest, and SPX its .886 at 2087.34.UPDATE:  10:13 AM

SPX should bounce here at the .886.  Back to long, initially targeting a backtest of the broken purple channel at 2092.NKD looks like it could have gone a little further, but USDJPY has Fib support already. I have to step away for a few minutes.  Watch your stops, but with NKD and USDJPY having reached their downside targets, we should get a bounce here.

My only concern is CL, which is still dropping.

UPDATE:  10:30 AM

CL almost to its red .618, should get a nice bounce.  We’ll keep an eye on it as it, and SPX, near their SMA5 10s.DX just reached some potentially strong support.Important charts for NKD…  The white arrows below mark a red TL that has been quite important many times in the past.  It should provide a strong bounce here, as well.  If it doesn’t hold, SPX has further downside — simple as that.

The bigger picture also shows strong support at the falling purple channel midline.  I don’t pound the table very often, but NKD is either going to bounce big or break down big here.  Given the support at this morning’s lows, it’s a good bet with clear stops.If it doesn’t hold at these levels, there’s immediate risk down to the white channel bottom at 16050.Interesting happenings in EURUSD today.  The weak dollar took the pair all the say up to a major channel line.  Seen here in the daily chart… …and, the weekly.Clearly, the little purple channel could take the pair higher.  And, it doesn’t always stop on a dime as it did on Jan 23, Jul 10 in 2015 and Feb 9 of this year.  But, it’s an important chart to watch.  And, if you’re looking for a quick trade, might produce some nice gains as it reverses to at least 1.127.

UPDATE:  11:59 AM

Just reached the .618 as ES reached a potentially important TL.  I’d take profits here and move to the sidelines. UPDATE:   12:16 PM

Back to long here as CL is going to break ES through that resistance.  Might be a little premature, as a backtest of the intersection of the SMA5 200 and the SMA5 10 at 2096.65 would be a better launch pad.  My only worry here is the ES .618 at 2097.12.  We’ll need some help getting past it, say a USDJPY spike?EURUSD about to break down?

UPDATE:  1:01 PM

This is as much latitude as I’m inclined to give it — a backtest of the purple channel midline.  Any lower, and I’d go back to cash.The problem in CL, which is tanking.  It’s not a bad time to get the tag in, just wondering why they’re not waiting until after the close.  UPDATE:  1:28 PM

I’m moving back to the sidelines for now.  The dollar, which should have reache 93.919 this morning, keeps getting weaker.  And, it’s dragging down USDJPY, NKD, etc.  Besides tagging our downside target and bouncing slightly, CL is doing nothing to help.  If SPX drops through the purple TL, I’d consider shorting. I wouldn’t be surprised if they let DX down to 93.919 into the close so as to flush out the weak bulls.

UPDATE:  2:31 PM

SPX just broke out on a CL spike.  I’m a little leery of following along, as ES still has its .618 to contend with (2097.21.)  Don’t see any problem, though, as long as you keep your stops tight.UPDATE:  2:38 PM

ES just reached its SMA5 200 as SPX did a TL off yesterday’s lows. I’d revert to cash here on the first sign of weakness. UPDATE:  2:58 PM

There’s the .886.  I’d close the long position and revert to cash here.UPDATE: 5:40 PM

SPX never topped the .886, despite a last minute ramp by CL.  In the end, SPX broke below the white TL from this morning’s lows — though it wasn’t much of a break down.

ES, likewise, broke trend at the end of the session.USDJPY managed to slip lower into the close.And, NKD put on a fairly lackluster show after an initial strong rebound.The problem, of course, was DX.   After dropping like a rock after the employment figures, it never could get any real momentum going.  Without a strong dollar, you don’t get a strong USDJPY.  And, with USDJPY having broken down below strong support to a kind of no-man’s land, we’re left to wonder whether it has more to go.  Hence — no carry trade go juice.And, CL just wasn’t interested in ramping a second time.Overall, a weak close.  Either more downside Monday, or a pretty decent headfake.

*  *  *  *  *

Speaking of Monday, remember I will be out of the office at an offsite.  Probably Tuesday, too.  I should get a chance to post my impressions early in the morning, and that’s probably about it.  I’ll get May’s numbers posted tomorrow morning, so I’ll extend the membership promotion a few days, too.

That’s all for now.  Happy Friday, everyone.