Weekly Market Outlook – It’s ‘Put Up Or Shut Up’ Time For The Bulls

 

In case you were wondering, last week was the worst week for stocks since March. It's also worth noting that the drubbing in question from March also sparked a rather significant rally. Will this time turn out any different? It's tough to say, though given that we're neither fundamentally nor economically any worse off now than we were then, we have to be open-minded despite the hysteria.

On the other hand, if enough traders simply refuse to believe stocks can do anything but sink from here, they'll drive stocks lower. But, there's a goofy hint that says traders aren't actually as bullish as they're acting.

We'll talk about that in a moment. The first thing we need to get out of the way is a look at last week's economic news. It ended with a look at November's jobs data, which is always interesting.  

Economic Data Analysis

Most of the reports from last week were overshadowed by the Presidential funeral and a stunning selloff in stocks. But, a handful of last week's news is most definitely worth backtracking for.

The week got going with a look at November's ISM Manufacturing Index, which was up from October's score of 57.7, and better than that 57.2 reading the pros were modeling. Indeed, the score of 59.3 rekindles hope that manufacturing businesses aren't slowing down. On Wednesday we got an ISM Services Index score of 60.7, which actually extends a renewed uptrend towards multi-year highs.

ISM Index Charts

Source: Thomson Reuters

Note that both numbers came in better than expected, suggesting economists may be underestimating the nation's economic strength.

November's auto sales remained firm. While car sales fell a bit as the post-hurricane reimbursed purchase wave slowed, truck sales were actually up a bit. The overall pace of 17.5 million may point to stabilization at that level.

Automobile Sales Charts

Source: Thomson Reuters

Last week's biggest news, of course, was the November jobs report. Unemployment didn't change, coming in again at a multi-year low of 3.7%. Though payroll growth slowed to only 115,000 new jobs, that's not a function of a limited number of positions as it is a limited number of applicants. It's also a function of a huge month of hiring in October. That count, already strong at 237,000 with the first reading, was actually revised up to 250,000.

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