Dec NFP was a whopper. So was the upside revision to Nov.

I am perennially surprised by the market’s failure to understand how the US economy can adjust.

But at the close, it’s striking that the SPX settled lower after what was on the surface great news. What could be the reason?

Earlier, the Chinese CSI 300 was down 2%, but London traders say that after state fund buying it closed up 2% (Evening Standard 08Jan16)

That means that the state needed to step in, in order to rally stocks by 4%. A nice little turn around.

To me that’s bearish, and it may be a reason why the SPX closed down, and the VIX rallied to 27%. Still, there’s no cause for alarm.

We’re not at a crisis point. One indicator would be if the SPX makes a substantial break below 1900. By substantial, I don’t mean dipping down for a swim under the surface; I mean disappearing, and then the life guard needs to dive in.

Another indicator would be if the VIX breaks through resistance at 27-28%. Then the notoriously volatile VIX could see at least 30%.

Meanwhile, that little VIX options trade that I discussed, when the index was at 20.5%, is doing nicely:

It was buy 17Feb 28c, sell 17Feb 18p for a buck, now worth appx $1.46.

You could cash in asap or wait until we see what China does next week. NFP may be quickly forgotten by Tuesday.

Now forget the markets, and have a weekend.