Coming Week: Bull Charge

Traders likewise cheered how the week ended -- with a slightly better-than-expected report of 110,000 new jobs added in the month of September and higher revisions to August's and July's payrolls. Investors cheered that Goldilocks was back and that the economy wasn't wounded by the summer credit crunch.

"The Fed tightened just enough through June of last year to pop a couple of bubbles and un-tighten the labor market," says T.J. Marta, fixed income strategist at RBC Capital Markets.

"It was win, win for the stock market," says Randy Diamond, trader at Miller Tabak. "Through hook or through crook, they'll look for a way to grind it higher."

But the bond market sold off on the news. James Bianco, president of Bianco Research, believes bonds sold off because of inflation fears. Embedded in the jobs report was an increase in average hourly earnings, a gauge of labor inflation. Also, the dollar fell on the jobs report against nearly every currency but the Japanese yen, which is lower-yielding.

Next week brings more insight into the Fed's thinking, when the minutes from September's meeting come out on Tuesday. Federal Reserve Vice Chairman Donald Kohn said in a speech Friday that the Fed did not cut merely to save the markets. He said the Fed seeks to "encourage moderate economic growth over time," and explained that the lagged effect of monetary policy would mean that the impact of September's easing wouldn't be felt until mid-2008.