Weekly Market Outlook - On The Cusp Of Another Bullish Wave

Stocks managed to shrug off the weakness from two and three weeks ago last week, with the S&P 500 logging a 2.6% rally for the recently-ended five-day stretch. It's far from the ideal bounce out of a lull though. The volume behind the move was never great and actually waned on the way up. Meanwhile, the NASDAQ Composite remains below a couple of key moving average lines, having bumped into them as resistance earlier in the week. The market's still got a lot to prove before we can safely say higher highs are in our immediate future.

We'll look at these things in some detail below. First, let's recap last week's modest amount of economic data, and take a look at (potentially) market-moving reports scheduled for this week. A couple of major releases are in the lineup.

Economic Data Analysis

The only numbers of any real interest last week as the inflation data, from the Bureau of Labor Statistics. But, given the worries of sharply rising interest rates in an effort to beat inflation before it materializes, this is pretty important information.

Beginning with the bottom line first, it's too soon to jump to conclusions, but inflation seems pretty tame. It was more or less what was expected for February, and on an annualized basis stands at 1.3%...well within the Fed's target. Producer inflation jumped to an annualized rate of 2.8%, building on January's surge to 1.7%. Don't overreact to that surge, however. Remember, we're now at the one-year anniversary for the pandemic, and pricing of inputs and outputs was squirrely at the time. Broadly speaking, nobody's dealing with prices for anything they can't handle (even if gas prices are getting a little annoying).

Consumer, Producer Inflation Charts

Source: Bureau of Labor Statistics, TradeStation

Everything else is on the grid.

Economic Report Calendar

Source: Briefing.com

This week's big news starts on Tuesday, with a look at last month's industrial production and capacity utilization. You'll recall that these two data sets correspond well with corporate earnings, which in turn corresponds with the market's long-term direction. Both are still well below their pre-COVID levels, but importantly, both are now consistently moving higher. Both are also expected to have moved forward again for last month.

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