Ever wonder why markets go crazy when big economic reports come out? Take last Friday's jobs numbers. The instant the number was released, S&P 500 futures plunged 8 points, just like that. A minute later, they were even again. Three minutes later, up 3 points. That's all the volatility you'd expect on a pretty big day -- all packed into three minutes.

The reason for the big swing: Stocks react instantly to the superficial headline number -- and whether that number is above or below expectations. Friday, the headline -- the very first words uttered on CNBC or published on the newswires -- was that the economy had lost 97,000 jobs in September, when the expectation was zero. Seemingly a big downside surprise, so sell 'em off!

The idea is that if the economy lost that many more jobs than expected, things must be pretty awful -- maybe we really are headed for a double-dip recession after all. So sell!

But then within seconds, investors began to digest other elements of the report. The second thing everyone saw Friday was that private payrolls had grown by 64,000 last month. That meant government jobs must have shrunk, but the real economy grew. And the total payroll decline was only a little below the expectation for 74,000, so maybe things aren't as bad as they seemed a second ago. Quick -- buy back those stock index futures we just sold!

Then, in another couple seconds, the next key number comes out -- the unemployment rate. It was 9.6%, when the expectation was 9.7%. A little upside surprise. Buy some more!

And that's just the first few seconds. There's still an hour until the New York Stock Exchange opens. By then, everyone will have had a good look at the numbers. If you didn't trade futures in the first few minutes, you'll have the whole rest of the trading day to draw your own conclusions and make your own play.

But the earlier the better. You should have the whole Employment Situation Report downloaded from the web site of the Bureau of Labor Statistics. For some reason, even though the futures markets have had an hour to process the information, and individual stocks have been trading in the pre-opening session, the New York opening bell is always another opportunity for the markets to reappraise the number.

On Friday, stocks recapitulated in slow motion what the futures had taken seconds to do, an hour earlier. In the first hour, the S&P 500 traded down 8 points. But from there it worked itself higher all day, and closed at a new recovery high.

Apparently, the more the market looked at the jobs numbers, the better it liked them. Is there anything you could have done to have known that in advance -- that is, to buy stocks in that first hour when they were down? I think there was.

Let me share with you the key indicators I look for in a jobs report. It was pretty clear on Friday that they all lined up bullish.

The very first thing I look at is hours worked. What really tells you about the health of the economy is how many hours people work, not how many people are working. The economy is better if two people are working 80 hours than if three people are working 60 hours. Hours worked were unchanged in September, even though there were 97,000 fewer jobs. Not great news, but good news, because the economy produced the same work with fewer people.

The next thing I look at is aggregate wage payments -- the total amount of money working people earned. They were up in September, even though payroll jobs were down. So even though there were fewer people working, workers in the aggregate were paid more money, so there's more buying power in the economy.

Third, I look to see whether the labor force grew or shrank. The "labor force" isn't just the number of people working. It includes unemployed people who are looking for a job but haven't found one yet. When the labor force is rising -- it grew by 48,000 people last month, according to Friday's report -- that means the economy is improving enough to draw more people into the job pool, even if they aren't working just yet.

Fourth, I look to see how long it's taking unemployed people to find a job. This has been a real problem in this recession. In fact, even during the last expansion it was pretty bad -- it took an unusually long time to find a job if you didn't already have one. On Friday, the average weeks of joblessness fell; another good sign.

Finally, I look to see how many workers are working part-time involuntarily. These are people who would work full-time if they could, but all they can get is part time work. This actually went up with Friday's numbers, which makes it the only bad thing on my list. And it's not really terrible. At least people are working.

With four out of five of my key jobs indicators looking good, I had to be a buyer of stocks on the dip Friday morning.

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The market seems think that further Fed action would be a good thing. So a jobs report that makes the economy look weak is bullish, because it will push the Fed to actually pull the trigger on more easing. What to do? My key indicators were all positive, but if I felt they were too positive, that would be bad because they might cause the Fed to wait.

Handicapping the Fed is a judgment call, and I don't know how to quantity it for you. But my judgment is that while the jobs numbers were good -- in the sense that they were positive, that is, not outright bad -- they weren't good enough to keep the Fed from acting. In the first four of the five numbers I listed above, the direction of change was positive, but the magnitude was very small.

That's the sweet spot! Not so bad that you'd think the economy is collapsing. But not so good to keep the Fed from calling out the helicopters!

And one final big-picture thought. Friday's jobs number was the last to come out before the election. That means the incumbent Democratic majority is going to have to run for re-election with the unemployment rate having been stuck at near 10% all year.

Sounds like the makings of a GOP landslide, if you ask me. And that's another reason to be bullish on stocks.