Weekly Market Outlook – February 29th, 2016
Last week wasn’t a no-holds-barred kind of bullish week, but stocks did manage to follow-through on the prior week’s rebound effort, breaking above some semi-important resistance levels. There still a tough road to travel, however, if the bulls are going to get anything going for the long haul.
We’ll take our usual look at the market’s upside and downside below, after dissecting some of this week’s and last week’s more important economic data.
Economic Data
Last week was pretty busy in terms of economic news, and more than a little bit of it was important stuff… even if the market didn’t read it as such. We also got a couple of curious mixed messages.
Perhaps the most alarming news from last week was the big drop in the Conference Board’s consumer confidence reading for February; it fell from January’s score of 98.1 to only 92.2 this time around. Not that it had been soaring, but the weak score may have officially started a downtrend. The Michigan Sentiment Survey was equally unimpressive with its a reading of 91.7, down just a bit from January’s final reading of 92.0. Although we learned later in the week that consumer spending reached multi-month high growth levels in January, our chart says we may want to be cautious.
Consumer Sentiment Chart
Source: Thomson Reuters
It was also a big, but confusing, week for real estate. Sales of existing houses remained solid at a pace of 5.47 million units, but new home sales slumped to a pace of 494,000, in January, down from December’s reading of 544,000. Nevertheless, the bigger trend remains upward, even though we’re still nowhere near 2005’s peak levels. That just means we have plenty of room to rebound.
New, Existing Home Sales Chart
Source: Thomson Reuters
Finally, though there’s no need to chart it, it’s worth noting that Q4 as GDP growth rate reached 1.0% with its second (of three) score last week. That’s a big, upward revision of the 0.7% growth measured the first time around, into the handily beat the 0.4% improvement economists were expecting.
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