How stock sector performance may shake out after jobs report

Cashin says: Nonfarm payrolls a reversion to the mean

The stunningly strong October jobs report — up 271,000 for the biggest 12-month gains since July 2009 — has many investors high-fiving. But others are surely scrambling to revise their bets.

Read More BOOM! Nonfarm payrolls up 271,000; jobs rate at 5%

The world was divided into two camps: those who believed a hike in December was coming and those who didn't.

Those who did listened to Fed officials' rhetoric — that they really wanted to raise rates — and made bets in that direction. There were several macro bets and stock sector bets.

Macro trend bets

  • Long: dollar, developed markets
  • Short: commodities, emerging markets

Stock sector bets

  • Short: energy, materials, industrials
  • Long: health care, consumer discretionary, financials

Here's one reason we had such an strong (and interesting) rally in October. Because some of the data was weak, the camp that believed there was no chance the Fed was going to raise in December gained traction.