Weekly Market Outlook – You Can’t Fight The Tape...Until You Can

Another week, another win. The broad market - as measured by the S&P 500 - rallied another 1.4% last week on the heels of a strong retail spending report for March, reaching a record high in the process. The Nasdaq didn't reach a new record, but logged a respectable 1.1% gain nonetheless. The Dow Jones blue chip index was up 1.2%, also hitting an all-time high

The advance is widespread and seemingly healthy, and looks like a trend worth plugging into if you haven't yet. There's also no denying that any bearish concerns or doubts about the rally's longevity of late have been debunked. Be careful though. Things that are too good to be true usually end up not being true, and we now have another reason to believe this market is near at least a short-term top.

We'll weigh it all below. First though, let's recap last week's big economic reports and preview this week's announcements. You likely already know the bullish figures, but the stuff you don't know is just as encouraging even if stocks as a whole are overextended here.

Economic Data Analysis

Two weeks ago we got a hint of unbridled inflationary pressure, when costs on the country's production facilities and factories jumped in March. That put all eyes on last week's consumer inflation figures, concerned that we were soon going to pay the price - literally -- for all the cheap money that's been printed over the course of the past year.

We're not, or at least not yet. While the overall inflation rate jumped to a multi-year high of 2.6%, rising food and energy prices are the culprit. Take them out of the mix and the annualized inflation rate is a more muted 1.6%.

Inflation Rate (Annualized) Charts

Source: Department of Labor, TradeStation

That doesn't mean we still can't see soaring prices in the foreseeable future, or that consumers aren't feeling the pain of more expensive groceries or gasoline. It's also not clear how much of that jump is linked solely to the one-year anniversary of the pandemic's arrival in the United States. For the time being though, there's no reason to panic.

That's especially the case in light of last month's retail spending figures. Consumers nearly upped their outlays by 10%, across all stratifications. Stimulus checks were a key driver.

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