Weekly Market Outlook - So Bad It's Good? Maybe. Or...

We mentioned a week ago that the selling effort had taken on a self-sustaining life of its own. The more the bears sold, the scarier things got, causing more people to sell, inciting more exits... you get the idea.

That reality continued to gel last week, although it had more help than most anyone is talking about. Friday was a big day for the markets not just because it was an option-expiration day, and not just because it was a triple-witching day. It was the last quadruple-witching day of the year, forcing lots of 'now or never' scenarios for traders.

One can't help but wonder if, now that any options-related overhang has been lifted, the underpinnings for the selloff have vanished. A bunch of other clues suggest a bottom has just been made.

We'll explore the possibility in some more detail below, after a review of last week's economic reports and a preview of this week's.

Economic Data Analysis

Pretty busy week last week in terms of economic news, but outside of the Federal Reserve's decision to raise interest rates in December but back off on 2019's plans to push them higher, nobody was able to look past the market's meltdown. Let's go back and look at the numbers you missed, in order of appearance.

The real estate market may not be in the dire straits some were thinking it might be in. November's housing starts and building permits were not only better than expected, they were better than October's totals.

Housing Starts and Building Permits Charts

Source: Thomson Reuters

One good month isn't a trend, but it's an encouraging start...

... a start bolstered by an uptick in existing home sales last month. Likewise, one good month doesn't undo a few months of weakness, but it's a start. Also notice that inventory of existing homes for sale has been dialed back a little.

New and Existing Home Sales Charts

Source: Thomson Reuters

We won't get new home sales data until this week, but the pros are looking for some forward progress on that front too. Given the other real estate data now in-hand, it's not difficult to expect we'll at least see that target met.

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