Weekly Market Outlook – Nothin’ Was Ever Going To Be Easy From Here

 

We knew headed into last week things were going to be tough. Stocks were already overbought, and traders were really relying on another round of stimulus checks coming through. That didn't happen, and traders flinched. The peak happened right where it should have happened too, suggesting traders had psychologically (and perhaps even unconsciously) actually planned a pullback here a while back.

Stocks are still overbought and ripe for at least a little more downside, which isn't the typical tide we see around this time of year. The market is in something of a tug-of-war as a result. That's one of the reasons we're treading lightly here, so to speak.

All things considered though, the weakness could have been worse.

We'll drill into the specifics below, pointing out how last week's lull may have been pre-ordained weeks ago. First things first though. Let's recap last week's economic news and preview what's coming this week.

Economic Data Analysis

The only item of real interest from last week an updated look at the nation's inflation. Despite the boatloads of cheap money in circulation right now, inflation remains surprisingly tame. The overall consumer inflation rate (annualized) stands at 1.6%, flat with October's level, and down slightly from September's rate.

Consumer, Producer Inflation Rate Charts

Source: Bureau of Labor Statistics, TradeStation

Yes, producer inflation is rising rapidly. Keep it in context though. IT plunged dramatically early this year. It's still a very modest 0.6% as of last month, which actually alarmingly weak.

Everything else is on the grid.

Economic Report Calendar

Source: Briefing.com

This week's going  to be considerably busier, with the Federal Reserve's look at capacity utilization and industrial productivity being the first big item in the lineup. These measures remain well below their pre-COVID peaks, but importantly, both are rising rapidly. The trajectory is the key. That said, economists are predicting this ascension is slowing down.

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