The market didn’t exactly welcome traders back from the long weekend with open arms. There was a lot of news to digest Tuesday morning, and none of it was particularly good. Protests and turmoil in Libya have pushed fears of oil supplies to the forefront, and the earthquake in New Zealand unsettled investors and pushed the indexes lower yesterday.

However, while we certainly couldn’t have predicted an earthquake or specifics about protests, the market is entering the period of volatility I’ve been telling readers to expect.

Today we’ll cover what’s happening and why this is likely setting up a huge buying opportunity for smart investors.

Last week, we focused on energy and why I’m not making any big recommendations in that area right now. Even though the violence in Libya is raising questions about global supply, in North America we are awash in natural gas, and crude oil supplies remain near record highs. Plus, other OPEC countries are stepping in to say that they can make up for any supply disruptions from Libya. So, even though crude oil prices hit an 11-week low last week, they resumed rising in recent days. I think the panic here will be short-lived and that this is not a stable trend that I will be putting money on anytime in the near term.

Also, I know that the devastation from the earthquake in New Zealand will be cleaned up and that city will recover from this tough period. Natural disasters are a part of our world, and we’ll continue to see cities hit by events like these. My home is in Florida, and the regular hurricane damage there is a constant reminder of the power of Mother Nature. All we can do is send our thoughts and support to those in need.

What is important to know is that the market was setting up for a bout of volatility following the end of earnings season anyway and that there appears this changeover period will happen quickly and set up an impressive buying opportunity for smart investors.

Economic News Brings an Optimistic Outlook

Investors have been watching the headlines closely and with more and more good news to read about, they have bid the market higher over the last few months. This has been great for fundamentally sound stocks.

There has been a dramatic change in business, consumer and investor optimism just in the past few months, and the next round of positive news is just on the horizon and should spark the next explosive rally.

It was GDP showing growth (the U.S. economy grew at an incredible 7.1% annual pace in the fourth quarter), manufacturing jobs on the rise and exports soaring that fueled the first leg of the rally, and it is going to come down to jobs to really get the market moving. This is the measure that all eyes have been focusing on since the recession hit and an improvement in this area may be just a few weeks away.

Unemployment has fallen from its 9.8% highs to about 9% now, but we have seen two disappointing jobs reports in a row for December and January.

However, despite lower-than-expected payroll growth in December and January, I expect revisions for previous months and a vastly improved payroll report for February. The reason I believe this is that the January ADP number was much higher than the Labor Department number, and this should result in a big “catch up” in the February payroll report.

Also, because of the terrible winter weather that disrupted January hiring, we’ll likely see the delayed hiring come in February as business gets back to normal. Therefore, the odds are high that the February employment report will surprise to the upside. If that happens, I expect the stock market will reaccelerate in early March after the numbers are announced.