Weekly Market Outlook – Coronavirus Supplied The Nudge, But Stocks Were Already Vulnerable

 

It's not as if the market was ever firmly bullish one at any point over the past four trading days (remember, Monday was MLK day). But, Friday's sizable setback sent a clear reminder to all traders that they can't turn their back on stocks for a single second. Although the indices aren't yet past the proverbial point of no return, the bearish end to last week should at least serve as a red flag.

We'll take a detailed look at what's wrong and how the bears could cause serious trouble below, as always. First, however, let's run down last week's economic announcements and preview this week's biggies. It's a big one, with the first look at Q4's GDP growth in the lineup.

Economic Data Analysis

It was a fairly quiet week, though we did get a couple of good glimpses of the real estate market's health. Sales of existing homes ticked up to an annualized pace of 5.54 million, topping expectations. And, in the same vein, the FHFA's housing price index improved the expected 0.2% between December and November.

New, Existing Home Sales with Inventory Levels

Source: Thomson Reuters Eikon

Home Price Charts

Source: Thomson Reuters Eikon

Note that last month's new-home sales and November's Case-Shiller Home Price Index will be updated this week. As was the case for existing homes and the FHFA's measure of home values, economists are looking for slight improvements for these last two real estate data points.

Everything else is on the grid.

Economic Calendar

Source: Briefing.com

This week will be a particularly telling one for consumer sentiment hawks. The pros are calling for a healthy increase in the Conference Board's measure, while the third and final reading for the Michigan Sentiment Index suggests another good month has been logged. Both have flattened, but they've done so near their reasonable upper limits.

Consumer Sentiment Chart

Source: Thomson Reuters Eikon

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