Weekly Market Outlook – Stuck In The Middle With You

 

Five straight days of losses for the S&P 500 certainly forces traders to rethink how strong this market really is. Yet, even as Friday's action was winding down, the bulls were testing the waters again, with the market never really slipping into too much trouble

On the other hand, even with Friday's intraday reversal effort, stocks were able to move to the proverbial wrong side of the fence. All the major indices are now back below their pivotal 200-day moving average lines. Only time will tell if they've got what it takes to crawl back above those lines. The good news is, it shouldn't take very long to get an answer to that question.

We'll take a detailed look at those charts below, as always, following a close look at last week's economic numbers and previewing this week's. There were, and are, some doozies.

Economic Data Analysis

A pretty busy week last week, as the federal government wraps up the catch-up it had to do with the numbers that weren't reported during the shutdown. The highlight, of course, was Friday's jobs report for February, but there was a lot of other noteworthy stuff crammed in before that... most of it pretty good.

The party started in earnest on Tuesday, with the ISM Services Index report to follow up on the previous week's ISM Manufacturing Index report. The pros were calling for a slight increase, but the actual figure was even better than expected.

ISM Index Charts

Source: Thomson Reuters

The manufacturing data from the ISM was down in February, though both figures are still above the critical 50 level.

We're still waiting on some of the last data delayed by the Federal Government shutdown, but last week we got a look at December's new home sales. Although existing home sales didn't snap out of their funk for the month, sales of new homes in December improved for a second month in a row, to a pace of 621,000. Inventory appears to be abating as well.

New, Existing Home Sales Charts

Source: Thomson Reuters

That being said, from the data we've been able to glean thus far, new home demand may well be perking up now. January's construction permits and housing starts were up, with starts surging higher. It may be the advent of a revival out of a funk that somehow permits never fell into.

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