America versus Europe– it sounds like the plot to some Hollywood fantasy blockbuster, but on Wall Street it’s hard cold reality with investors forced to reconcile positive economic data from the US versus negative developments overseas on almost a daily basis.

And on Friday, the drama continued.

In the US, the latest jobs data showed our economy added 200,000 jobs in December, topping forecasts; also the unemployment rate fell to 8.5 percent, a near three-year low. That data followed another strong employment report from ADP on Thursday, and recent bullish readings on housing and manufacturing.

Overseas, ratings agency Fitch cut Hungary's credit rating to junk, underscoring doubts about the government's willingness to change its controversial policies in return for aid to stave off a financial crisis.

Also, the euro, which has been closely correlated with global equities, fell to a fresh 16-month low against the dollar.

Considering this market is chock full of good, bad and ugly, how should you position? What should you be watching?

Strategy Session with the Fast Money traders

Trader Joe Terranova thinks the main market catalyst will be strength in the US, and suggests putting 1292 on his radar – the high from October. “I’m looking for that to get taken out,” he says.

After the broadcast he tells us he expects technicals to validate the upward momentum. 

"Money managers came into the year defensive," he says, "but the price action will force them to put money to work. As a 'tell', he suggests watching yields on Treasurys, “look for them to begin to climb,” he says as a sign of rotation into equities.

Trader Jon Najarian agrees entirely. He thinks the big x-factor constraining an even greater rally was employment data.  "That was the unknown," he says.  “Investors wondered, are we going to have a misstep? Was ADP an accurate read? Now we know, it was.  

Brother Pete Najarian agrees. He points to the recent strength in the banking sector and decline in the Vix as a tell. “We were over 23 earlier in the week and now the Vix is around 21.  That tells me a lot – that says there’s no panic and it suggests investors believe in the move.”

Trader Steve Grasso is on the other side. He thinks Europe triumphs.

“I’m expecting a pullback,” he says. “After the good payrolls data – why didn’t the market really rip?” he asks. “I think it’s because the market is waiting for Europe.”

Grasso goes on to say the key level he's watching right now is 1249 – the Japan bottom. If the market breaks below that level, technicals suggest there’s another 5% downside.

What do you think? We want to know!

______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment, but not have it published on our Web site, send those e-mails to .

Trader disclosure: On Jan 6, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova owns APC; Terranova owns OXY; Terranova owns XOM; Terranova owns VRTS; Terranova owns IBM; Terranova owns CSCO; Terranova owns AXP; Terranova owns SBUX; Terranova owns CSX; Terranova owns SWN; Terranova owns AXP; J. Najarian owns AAPL; J. Najarian owns AKS; J. Najarian owns BAC; J. Najarian owns PNC; J. Najarian owns GS; J. Najarian owns NFLX; J. Najarian owns MSFT; J. Najarian owns AA; P. Najarian is long AAPL; P. Najarian is long C; P. Najarian is long JPM calls; P. Najarian is long WFC calls; P. Najarian is long NFLX calls; P. Najarian is long MSFT ; P. Najarian is long INTC; P. Najarian is long YHOO; P. Najarian is long INTC; Weiss is long EUO; Weiss is short FXA; Grasso owns ASTM; Grasso owns AVAV; Grasso owns BA; Grasso owns D; Grasso owns LIT; Grasso owns MHY; Grasso owns PFE; Grasso owns PRST; Grasso owns S; Grasso owns XLU; Weiss is long EUO; Weiss is short FXA

For Steve Grasso
Stuart Frankel & Co and its partners own CSCO
Stuart Frankel & Co and its partners own CUBA
Stuart Frankel & Co and its partners own GERN
Stuart Frankel & Co and its partners own HPQ
Stuart Frankel & Co and its partners own HSPO
Stuart Frankel & Co and its partners own MU
Stuart Frankel & Co and its partners own NYX
Stuart Frankel & Co and its partners own PRST
Stuart Frankel & Co and its partners own XRX

For Doug Sipkin
Ticonderoga Securities LLC makes a market in (MS) security. Ticonderoga Securities LLC, in its market making capacity, sells to or buys from customers the securities of this company on a principal basis.

For Willie Williams
No disclosures

For Justin Patterson
There are NO disclosures.
Morgan Keegan does not allow its analysts or their immediate family members to hold a position of any kind in the securities of the companies they follow.

For Jason Gursky
Citigroup Global Markets Inc. and/or its affiliates has a significant financial interest in relation to Boeing Co., Goodrich Corp., Lockheed Martin Corp., Northrop Grumman Corp., Precision Castparts Corp., Raytheon Co., Textron Inc.

Citigroup Global Markets Inc. or its affiliates beneficially owns 2% or more of any class of common equity securities of Goodrich Corp.

For securities recommended in the Product in which the Firm is not a market maker, the Firm is a liquidity provider in the issuers' financial instruments and may act as principal in connection with such transactions. The Firm is a regular issuer of traded financial instruments linked to securities that may have been recommended in the Product. The Firm regularly trades in the securities of the issuer(s) discussed in the Product. The Firm may engage in securities transactions in a manner inconsistent with the Product and, with respect to securities covered by the Product, will buy or sell from customers on a principal basis.

CNBC.com with wires.