Weekly Market Outlook – The Worst Way To Renew The Rally

On the surface, the bulls got what they wanted. Stocks ended the holiday-shortened week on a high note, with the S&P 500 making a record high. The NASDAQ fared even better, pushing up and off of the technical support we discussed a week ago. And, it all happened at the beginning of April -- a month in which the S&P 500 averages a 1.56% gain, and is twice as likely to move higher than it is to move lower. All's right in the world.

Except, of all the ways to rekindle a rally, this is far from the ideal one. A couple of subtle clues (still) suggest there's not a lot of room left to run. And, Thursday's big jumps left behind a couple of pitfalls. We'll take a look at those pitfalls after a recap of last week's economic reports and a look at what's coming this week. Spoiler alert: Last month's jobs report was fantastic.

Economic Data Analysis

The employment update from the Department of Labor may have been last week's biggie, but there was plenty of other noteworthy data reported last week. Case in point: Home prices. Both the FHFA Housing Price Index and the Case-Shiller Index were up in a big way, underscoring sustained demand for homes and the ensuing shortage in homes to buy. Both measures continue to push deeper into record territory.

Home Price Index Charts

Source: Standard & Poor's, FHFA, TradeStation

Of course, bear in mind that the Case-Shiller and the FHFA numbers reported last week were for January. Things could have changed in the meantime, and probably did to some degree. Also notice that February's pending home sales (not shown) fall more than 10%.

It's not from a lack of optimism, though. The Conference Board's consumer confidence reading for March jumped to 109.7, easily topping expectations and hitting the highest level it's seen since the pandemic took hold.

Consumer Sentiment Charts

Source: University of Michigan, Conference Board, TradeStation

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