Despite a troublesome jobs report on Friday, stocks rally late in the day. The highly anticipated non-farm payrolls couldn't keep the Market down last week. While the subpar report dampened hopes of a stronger recovery, the bulls showed up late in the trading day on Friday, helping the major indices to finish the week in positive territory.

The move higher on the final trading day of the week was a little in doubt after the disappointing non-farm payrolls were released. Ahead of the release, the Street was looking for a flat reading for December. But unlike expectations, the actual report showed a loss of 85,000 jobs last month.

The only bit of good news in the release was that November's job loss had a positive revision. The government revised its previous report to show an actual gain of 4,000 jobs in November. This was the first report of jobs being added to the economy and was certainly better than the loss of 11,000 jobs that was originally reported. However, the chart below shows the turnaround last month with jobs once again being removed from the economy in December.

Graphic from Briefing.com

The revision in the previous month's job report probably helped keep the unemployment rate from rising last month. As expected, the nation's unemployment rate held steady at 10.0% in Friday's release. While this was better than an increase in the rate, keep in mind that it still stands near a 26-year high.

Graphic from Briefing.com

It was a flat session for the price of crude on Friday. It settled up a mere $0.09 a barrel higher at $82.75 a barrel on the New York Mercantile Exchange. While crude struggled, gold moved higher. Thoughts of interest rate hikes in the future helped the shiny metal to rise $5.10 an ounce to finish the week at $1,138.20 a troy ounce. Of course, it was also helped by the weakness in the dollar.

Friday's Economic Reports

Friday's late-day rally in the Dow Jones Industrial Average helped the large-cap index secure a winning week. For the first five trading days in 2010, the Dow is up 190 points. The strong start helped put the index up 1.82% for the New Year while breaking through another decent resistance level on the daily chart at 10,600. Friday's advance of 11 points helped the Dow finish the trading week at 10,618 points. Let's see if it can continue moving north next week.   

The S&P 500 fared even better than the Dow last week when it climbed nearly 30 points over the first five trading days of 2010. Friday, it rose 3 points to finish the week at 1,144 points while marking its best weekly performance in two months. This also puts the S&P 500 up 2.68% for 2010, now that's not a bad start to the New Year. On the daily chart, it also broke right through the old barrier at 1,140 and just kept moving north. Let's see if this continues as we enter the new week.  

The Nasdaq Composite struggled for the last few trading days, but turned that around on Friday when it surged 17 points. This helped the tech-laden index finish the week up 2.12% while sitting above a resistance level with its closing price of 2,317. Let's see if it's able to hold onto this momentum as we start the new trading week.   

Friday was another significant session for the VIX (CBOE VOLATILITY INDEX). The "fear index" fell to another significant low on Friday when it tumbled 0.93 of a point to finish the week just above a 52-week low at 18.13 points. Another session like Friday's and the VIX could slice right through the 18 point level.

We had one spread giving us a lot of concern last week, but even this one was able to turn things around Friday afternoon. Google had a rough stretch last week but the rally on Friday afternoon now leaves us in pretty good shape heading into the final trading week of the January option cycle. As long as we can keep tech from another sharp sell-off this week, we should be able to coast to a nice profit for the first cycle of 2010.

However, this week does mark the beginning of the earnings season, which could provide a bumpy path to the finish line for us. The good news is that our index spreads are sitting so far out of the money that we shouldn't have any concerns in those positions. Let's keep a close eye on tech because that's the only real concern for us this week. With that said, let's take a look at how we're sitting in each position heading down the home stretch.

PCLN 200-190 BULL PUT SPREAD (15 Contracts entered on 12/29/09)

PCLN CLOSED AT $216.21 Today (16.21 points away from our put spread)

Profit potential of $35.00 per contract

Contingent Stop Order set at $202.50

Priceline made a nice move to the upside on Friday around the noon hour, but then couldn't hold onto a majority of its gains by the time the closing bell rolled around. Unlike most stocks that surged late in the day, PCLN was only able to cling to a $0.08 gain at the close, leaving the stock 16 points above our "short" strike price at $216.21. On the daily chart, PCLN has found some support from a low in the middle of December. As long as this level continues to provide support this week, we should be in good shape. We also like the fact that its 50-day moving average (red line) continues to rise on the chart. This line should also be some nice support for the stock in case there's more selling. We like how we're sitting in this one.  

RUT 580-570 BULL PUT SPREAD (15 Contracts entered on 12/31/09)

RUT CLOSED AT $644.56 Today (64.56 points away from our put spread)

Profit potential of $40.00 per contract

Contingent Stop Order set at $585.00

We really couldn't ask to be sitting much better in this spread heading into the final week of trading. The small-cap index continued to break through old resistance levels on the daily chart, helping to extend the cushion in our put spread. With us now holding nearly 65 points of breathing room in this spread, we shouldn't have anything to worry about this week.

OEX 490-480 BULL PUT SPREAD (15 Contracts entered on 12/31/09)

OEX CLOSED AT $527.76 Today (37.76 points away from our put spread)

Profit potential of $35.00 per contract

Contingent Stop Order set at $492.50

The OEX also continued to march higher on Friday, making us even more comfortable in this position. The index advanced 1.42 points on the final trading day of the week, leaving the OEX at $527.76. With time running low, we should be able to coast to the finish line in this one with ease. We don't see anything to concern ourselves with in this position.  

GOOG 580-570 BULL PUT SPREAD (15 Contracts entered on 12/31/09)

GOOG CLOSED AT $602.02 Today (22.02 points away from our put spread)

Profit potential of $35.00 per contract

Contingent Stop Order set at $582.50

Google was the one position causing us to take notice last week when it started to tumble on Wednesday and continued to sell-off through the beginning of Friday's session. However, it rallied nicely about a half hour into the trading day on Friday and then kept moving higher. It finished the day up $7.92 at $602.02. With the company set to release earnings in 11 days, we don't see this one falling much farther. We'll continue to monitor this one closely this week, but we really don't mind where we're sitting in this one for the time being. But even with this said, make sure your contingency stops are set just in case something unforeseeable happens. It's always better to be safe than sorry. 

As always, Trade Happy and Trade Smart