Weekly Market Outlook – Last Week’s Loss Wasn’t As Bad As (Yet Worse Than) It Seems

In the shadow of a 71% runup from last March's low, traders had to know stocks were due for a dip. We got one - again - last week. All told, the S&P 500 finished the week lower to the tune of 2.4%.

Of course, the index has snapped back from worse selloffs several times since the rally got going nearly a year ago now, and did so quite quickly. Most of the major indices found technical support exactly where you'd expect them to (and want them to), as well.

We're hardly in a "danger zone" just yet, and while the volatility indices moved decidedly higher, that didn't snap their bigger-picture downtrends. That has to happen as well if this is actually an omen of a major market correction.

We'll take a detailed, visualized look at all of it below, right after a rundown of last week's big economic announcements and a preview of what's coming this week.

Economic Data Analysis

Last week's batch of economic reports was heavily focused on the housing market, so we'll start there. In short, this sliver of the economy remains a bright spot. Home prices continue to rise into record territory, and home sales are brisk (even if unevenly so).

As for home values, the S&P Case-Shiller Home Price Index was an incredible 10.1% higher than year-ago levels. While that was for December -- not January's or February's -- sales, the trend is clear. That same trend jibes with the FHFA's measure of housing price, which grew to the tune of 1.1% between November and December.

Housing Price Index Charts

Source: Standard & Poor's, FHFA, TradeStation

The demand based on home values likely persisted at least through January, if home sales are any indication. Sales of new homes bounced back to an annual pace of 923,000 for January, from December's print of 829,000.

That's still shy of September's peak of just over 1 million, but the overall trend is clear. Though we have less historical data to judge, this accelerated rebound in house purchases from the initial COVID-19 slump is being mirrored by sales of existing homes, as well.

Home Sales Charts

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