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

Retail Spending Charts

Source: Census Bureau, TradeStation

It was a much-needed shot in the arm after February's consumerism contraction, although questions of longevity remain.

Those longevity questions are underscored by a slightly disappointing read on the nation's factory output and utilization. Capacity utilization improved from a revised 73.4% to 74.4%, but that's not the sort of growth economists were expecting -- particularly from factories that were hiring to meet the swell of demand linked by what was supposed to be an economic and employment rebound.

In this vein, industrial production's 1.4% growth was half what it was supposed to be, and may have been exaggerated by comparing it to February's even-bigger decline.

Capacity Utilization and Industrial Productivity Charts

Source: Federal Reserve, TradeStation

In other words, this is a sore spot. Whatever the economy's other problems, real estate seems to be a bright spot, with people on the hunt for new homes. Housing starts jumped to a multi-year high-pace of 1.739 million units, while permits were strong at 1.766 million -- near a recently-hit record.

Housing Starts, Building Permits Charts

Source: Census Bureau, TradeStation

We'll round out the real estate picture this week with a look at actual sales of homes. Everything else is on the grid.

Economic Report Calendar

Source: Briefing.com

As was noted, we'll get home sales reports - new and existing - this week. That's all the economic data we care about that we're getting this week, however. We need both to be solid numbers after a couple of months' worth of declines, although bear in mind that a sheer lack of inventory is creating something of a bottleneck as well. That's something the ever-rising price indicators and huge starts and permits data confirms.

New, Existing Home Sales Charts

Source: Census Bureau, National Association of Realtors, TradeStation

Stock Market Index Analysis

More unlikely gains were logged last week. You may recall that a week ago the S&P 500's rally was stalling at a technical resistance line (red, on our chart below) that connected all the key peaks going back to October. The advance since pushing up and off of the 50-day moving average line (purple) late last month is a 7.8% romp. This is decidedly-bullish momentum built on a reasonably-strong foundation.

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