So much for bad news is good news.
S&P futures dropped 20 points, and bond yields slipped as nonfarm payrolls came in at 142,000, well short of expectations of 200,000. But the real killer was notable downward revisions in July and August.
Not to mention, hourly earnings were flat.
So what do traders do? They will likely do what they have been doing for the past six weeks or so: nothing. After lowering exposure dramatically, most traders have exhibited no interest at all in increasing exposures, even though the S&P 500 is down about 13 percent from its high on May 21.
My friend Jeff Saut at Raymond James highlighted exactly the dilemma investors are facing in October: "The portfolio managers basically wanted to be 'flat' because if they make a 'big bet' right here and they are wrong, not only do they have performance risk, but also bonus risk and ultimately job risk at year end."