Weekly Market Outlook – Market Disinterest, Or Genuine Weakness?

Santa Claus came to Wall Street this year, but he didn't show up with a sack full of presents -- it was only half full. The S&P 500 logged a lackluster 1.8% recovery from Monday's low following a lousy opening to the week, but that still left the index down just a hair for the holiday-shortened week. Mostly, traders were disinterested.

It's noteworthy, however, that the indices found technical support right where they needed to in order to keep the rally alive. We'll look at that matter in some detail below. First, let's recap last week's economic announcements and then preview what's in the cards for this week.

Economic Data Analysis

Economists knew recent trouble would take the wind out of consumers' confidence sails. But, they didn't know by how much. It was a lot. Not only did the Conference Board dial back November's first figure of 96.1 to 92.9, this month's reading of 88.6 was the lowest level since April.

The Michigan Sentiment Index edged a little higher, to 80.7. That's actually up from November's reading, though still concerningly low. Consumers who aren't confident about their situation tend not to buy stocks, or even discretionary items.

Consumer Sentiment Charts

Source: Conference Board, Univ. of Michigan, TradeStation

This waning sentiment is reflected in November's tally of new home sales, which slipped from October's 945,000 to an annualized pace of 841,000. (Existing home sales fall last month, as well.) Just bear in mind that the pullback was from an extreme surge in August and September. In the grand scheme of things, that's still quite high.

New Home Sales Charts

Source: Census Bureau, TradeStation

Home prices are holding up as well. In fact, they're continuing to edge higher. The FHFA House Price Index level for October grew 1.5%. That's a 10.2% year-over-year improvement.

FHFA and Case-Shiller Home Price Charts

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