Yes, today was a biggie in terms of economic data.... maybe the biggest of all right now. Today was when we got the official (from the Department of Labor/Bureau of Labor Statistics) snapshot of September's employment situation. Once again you heard the more encouraging part of the story, so once again we have to tell you the rest of the story. First and foremost, while the actual situation may not be as good the headlines implied it was on Friday, it's still basically "good". Let's explain what we mean. Yes, the unemployment rate legitimately fell from 6.1% in August to 5.9% in September. It wasn't just some lucky calculation that allowed the unemployment rate to move lower either.... for the most part. The number of people with jobs did grow, from 146.368 million to 146.600 million. That's an increase of 232,000, which roughly jives with the 248,000 new payrolls officially/reportedly created last month. Similarly, the number of unemployed people fell from 9.591 million in August to 9.262 million last month. That's a drop of 329,000 people. So far so good, right? Well, things may not be quite as stellar as they seem in the surface. What the decent dip in the unemployment rate somewhat obscured is that the number of people who actually consider themselves part of the workforce fell from 155.959 million to 155.865 million. That's 97,000 fewer people who have jobs or are bothering to look for one. That contraction aligns pretty well with the number of people who do not currently count themselves as part of the active labor force, but would like a job if one was available. That number grew from 6.304 million to 6.349 million in September - an increase of 45,000. The chart below puts last month's numbers in perspective with their bigger-picture trends. The story here is basically the same as we've been telling for a while now... the true employment picture isn't as solid as it's being made out to be most of the time, but it's at least pointed in a positive direction. If you really want to know when the labor market is improving in a significant way, it's when we finally start to see a measurable recovery in the labor force participation rate and the employed/population ratio. The former fell from 62.8% to 62.7% last month, while the latter held steady at 59.0% in September. I know there are a lot of critics of using those numbers as a measure of the jobs market's health. These guys argue that the number of people beyond what most would consider a normal working age is expanding as people live longer. And to a certain degree they're right. That's not the only reason the population is growing though. While the number of births in the U.S. did slow between 2007 and 2012, it picked up last year, and is on pace to grow again this year. Besides, the number of people who were or became of working age (18+) since 2007 has actually been increasing during that time even if the number of births tapered off for a few years. Point being, we can't entirely blame the falling participation rate on the aging of the population - it's mostly the result of a lack of jobs. As evidence to that end, consider this: The number of people with jobs now is 146.600 million, which is basically in line with the prior peak of 146.595 million workers seen in November of 2007. If the population has grown and the economy has truly recovered since then, then the raw number of total workers should be higher. Indeed, the size of the actual labor force HAS grown since then. It was at 154.8 million at its peak in late-2008, and now it's at 155.9 million. And that doesn't factor in the increase in the number of people who are not in the labor force but do want a job. That total was around 5.4 million at the end of 2008, but is around 6.3 million now. That's a difference of about 700,000 people who aren't being counted as part of the work force but probably should be. If they were being counted, it's unlikely the unemployment rate would have budged in September. Point being, things may be on the mend, jobs-wise, but they're not "great" by any means. I thought Rick Newman over at Yahoo! Finance really did a good job explaining a couple of other things that are also quietly wrong with the labor market as it stands right now. Check it out. Now, let's get on with a look at today's market action, and what it means for us. Just as Scripted As we discussed was most likely to happen in yesterday's newsletter, the market followed through on Thursday's reversal bars to dole out a nice gain for the day. In fact, the move was so strong we're now at a critical inflection point I would have thought we weren't going to test until next week. We only need to look at a chart of the S&P 500 today, as every other index looks about the same (and the analysis of them would be about the same). After Thursday's dragonfly doji, the bulls followed through pretty well. In fact, the surge was so strong that the S&P 500 has already tested the 50-day moving average line.... without moving above it. Take a look. Maybe it would be unfair to expect the market to hurdle its 50-day lines today. The S&P 500 was up well above 1.0% headed into the close on Friday, which is an impressive move on its own even if the index didn't push past a critical line in the sand. I can't help but wonder, though, did stocks just burn up what little fuel they had in the tank by putting the pedal to the metal today? As we've said before, pacing is everything, and nothing can kill a rally faster than too much of a surge. The failure to actually clear the pivotal 50-day moving average line only casts more doubt on any potential upside from here. There was also a distinct lack of volume behind the bullish effort from Friday. Now, I'm not saying we're bearish at this point. We're not bullish either, however. This is one of those scenarios where stocks are truly at a crossroads, but have yet to choose one road or the other. It's going to be forced to make a decision soon though... like Monday. My outlook is still a short-term bearish one, as we discussed in Thursday's newsletter. The bounce John Monroe over at the Elite Opportunity saw coming has pretty much panned out as expected, and from here I believe the reversal-prone market is going to reverse course again and head lower. This time, however, a move lower will be a second break under some major support levels. With nothing else to stop the bleeding, a small breakdown will become a sizable breakdown in a hurry. It's just a guess at this point though, based on a gut feeling. The reality is, the S&P 500 could just as easily edge a little higher early next week and move above the 20-day and 50-day moving average lines. With little to gain by taking a stand right now, I'm happy to remain on the sidelines until it all gets sorted out. There will be enough movement after the market makes a decision here to capitalize on the swing. In simpler terms, this is crunch-time for stocks. It's either going to break out or break down in a big way soon. Let's be patient to make sure we can be right. From the Site Before we sign off for the day and the week, there are a handful of commentaries we saw posted at the site today we think you just have to see. One of them comes from David Ibrahim, who took a trader's look at CEL-SCI (CVM) this morning. For those of you who've been reading the SmallCap Network newsletter for several years will know CEL-SCI has been a name we've kept close tabs on for a long, long time. It's got a breakthrough cancer drug currently in Phase 3 trials, and it looks promising. In any case, Ibrahim's quick examination of CVM today may be worth your time. He makes a good point... it just seems like news could be around the corner, which would be catalytic. James Brumley - who has been spot-on with the last several swings from Ibio (IBIO) - is changing his tune on the company.... to a long-term bullish one. All the recent volatility seems to have been working towards something bigger, and this week's activity may well have been the beginning of a big bullish thrust. You really have to see Brumley's charts to fully appreciate the upside from Ibio here. Last but not least, John Udovich took a deep look at one of the market's recent hot buttons today - Female Health Company (FHCO). FHCO makes and market's the world's only female condom. The stock jumped yesterday (after a long pullback) on news of a huge order. While the news alone can't keep the stock going higher, it may have been a much-needed catalyst for a rebound. Check it out. That's all we've got for now, folks. Have a great weekend. We'll be back at it on Monday, probably with a new pick or two.