Weekly Market Outlook - Higher Highs Hit, But Higher Hurdles Ahead

Stocks shrugged off the week-before weakness to hit record highs (again) last week. But, no sooner did stocks reach a new record on Tuesday before petering out on Wednesday. Another round of stimulus checks is probably in the works, and the President's inauguration when off without a hitch. But, that's not new nor surprising. The buyers are running out of fresh reasons to keep buying, which is to say, running out of reasons to keep pushing valuations to more dangerous depths.

From a purely technical perspective though, this shallow rally is proving to be an ideal one.

We'll look at that idea in some detail below, as always. First, though, let's recap last week's economic reports and look at what's coming this week. It's gonna be a busy one.

Economic Data Analysis

Last week wasn't loaded with economic news, but it was a big one for real estate... and an encouraging one. Housing starts and building permits not only grew (bucking expectations for a lull), but grew in a big way. The 1.709 million permits pace is a multi-year high, while housing starts reached an annualized clip of 1.669 million... another multi-year high.

Housing Starts and Building Permits Charts

Source: Census Bureau, TradeStation

In the same vein (and more on this below), sales of existing homes jumped to a pace of 6.76 million units, defying expectations for a slight lull.

Everything else is on the grid.

Economic Report Calendar

Source: Briefing.com

This week is loaded, kicking off with Tuesday's consumer confidence report from the Conference Board. Look for a slight uptick there, although economists are calling a small downtick for the University of Michigan's sentiment index. Both figures remain well below their pre-COVID levels, and neither is exactly making a beeline recovery.

Consumer Sentiment Charts

Source: Conference Board, University of Michigan, TradeStation

Also on Tuesday look for the Federal Reserve's decision on interest rates, though nobody expects the FOMC to change its mind about its target Fed Funds Rate target of between 0.0% and 0.25%.

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