Weekly Market Outlook – Not Yet Time To Breathe Easy

Weekly Market Outlook 

It took a while to get started…  the first four days of last week, to be precise. But, once the bulls got rolling on Friday, they didn’t look back. Thanks to that day’s 2.5% advance from the S&P 500 (SPX) (SPY), the index finished the week 1.7% higher, and perhaps more importantly, finished the week above a couple of key resistance lines.

It remains to be seen if Friday was a fluke or an omen of what’s to come. As it stands right now, however, the momentum is clearly bullish.

We’ll dissect last week’s action below, right after a closer look at this week’s and last week’s key economic numbers.

Economic Data

We got a fair amount of economic news last week, but only a couple of items were hard-hitting.

We knew headed into last week that the real estate picture was still looking pretty solid, given December’s strong reports of new home sales and existing home sales. This strength was confirmed by the Case-Shiller Index and the FHFA Housing Price index.  The former grew 5.8% on a year-over-year basis in November, while the latter was up 0.5% on a sequential basis for the same month. This ongoing ascension against a backdrop of a growing number of unit sales continues to suggest a firm real estate market even though the stock market is wobbly.

Case-Shiller, FHFA Housing Price Index Chart

Source: Thomson Reuters

As for sentiment, the Conference Board’s consumer confidence level rose from 96.3 in December to 98.1 in January, pretty much assuring that measure of sentiment remains in a bigger-picture uptrend.  As for the Michigan Sentiment survey, though, does remain. It slipped from 93.3 to 92.0 for January, and while that slide lower follows three consecutively higher readings, we seen a streak of lower peak readings since the beginning of last year…  something that can also be said of the Conference Board’s data…  although to a lesser degree. The data broadly remains “on the fence.”