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The markets digested a weaker-than-expected jobs report Tuesday. Investors were as hungry for a strong employment number as you'd be for roast sirloin (which, by the way, I have a recipe for below). But it turned out that employers added just 148,000 workers in September, according to the Labor Department, missing expectations for a gain of 180,000. Still, the unemployment rate dropped to 7.2 percent, the lowest level since November 2008.
But employment is nowhere near where we need it to be. The jobs number says we continue to make slow progress, but will this report really cause the Fed to change course? No. Remember, this report is 18 days past due thanks to the partial government shutdown.
The fact is the 16-day shutdown most likely hurt any economic momentum, leaving the Fed in a somewhat compromised position. As many analysts and strategists have been saying, the disruption caused by the antics in D.C. has pushed out the Fed's timeline for tapering. And the idea of QE's continuing for an extended period has only been made clearer by the nomination of Fed Vice Chair Janet Yellen to succeed Ben Bernanke as chair. Thus, last week's rally.
(Read more: Weak jobs report signals longer Fed easing)
To be sure of economic strength, we'd have to see a few good jobs numbers. But next month's report will be questionable and that takes us into December just when we run into another political firestorm.
The markets have already delivered a strong performance month-to-date, even as the macro, the micro and the political dysfunction continues, but remember the trend is your friend and you CANNOT fight the Fed. Where else is an investor to go?
According to published reports, many emerging markets have enjoyed a rally during the month, including the BRIC and MIKT nations, as well as some in Latin America and the Caribbean. Even Greece managed to rally in October. All this action is credited to the Fed's remaining firmly in control of easy money. Therefore, after some digestion (not a correction), we may continue to see the U.S. markets attempt to create new highs.
As investors refocus on earnings, we continue to see a mixed picture. Fourth-quarter earnings growth is running at about 1 percent, versus the estimated 4 percent.
We remain in a long-term bullish pattern, yet we are a bit overbought in the short term. The McClellan Oscillator is approaching a reading of 80; a reading above 60 qualifies as overbought, so a pullback shouldn't come as a surprise. We continue to hit our head on the trend line at 1,745 and would see short-term support at 1,725. Stay tuned.