While the market may have ended last week on a sour note, a little pre-weekend profit-taking can't entirely come as a surprise. Once traders learned on Wednesday the Federal Reserve wouldn't be imposing a rate-hike this month, they celebrated in the form of a 1.7% advance that lasted all the way through Thursday's close. Friday's 0.6% lull didn't even drag any of the major indices back below their most important technical levels.

Still, stocks could just as easily kick-start a pullback here as they could reignite the rally. They finished the week on the fence, and within sight of a breakdown and a breakout. Overall, the bulls look to have a bit of the edge here. We'll look at the stock market big picture in a moment, after a rundown of last week's and this week's most important economic news.

Economic Data Last week wasn't all that busy in terms of economic data. The biggie was of course Wednesday's interest rate decision, and the Fed's assessment of the current economic condition. The Federal Reserve is pleased with the economy, though doesn't see it so strong that it needs to be cooled. It was also a big week for real estate, and home constriction in particular. It wasn't an especially encouraging week, however.

That data started out with August's housing starts and building permits. Both fell from July's levels, and fell short of estimates. Perhaps more alarming is how both seem to be slowing down in a much bigger way.

Housing Starts and Building Permits Chart 1

Source: Thomson Reuters Existing home sales were also a disappointment, falling to a pace of 5.33 million versus expectations for a rise to a pace of 5.5 million. Limited inventory may continue to be holding sales of existing homes back.

Existing Home Sales, Inventory Chart 2

Source: Thomson Reuters We won't get an update on new home sales until this week. Inventory have been light there too, though it's worth noting the weakness we've seen in terms of existing homes has largely been offset by the rise in purchases of new houses.

Everything else is on the following grid: Economic Calendar 3

Source: Briefing.com In addition to August's new home sales numbers, this week we'll also get an update on home prices via the Case-Shiller 20-City Index. We already learned last week the FHFA Housing Price Index grew (again) 0.5% in July, and the pros expect a year-over-year improvement from the Case-Shiller Index. Both continue to generally march higher, though even on the home-price front we're starting to see a headwind... at least from the Case-Shiller Index. [Mid-year flattening isn't unusual there.] Home Price Index Chart 4

Source: Thomson Reuters On Thursday we'll get a final reading on last quarter's GDP growth. Economists expect an upward revision on the prior reading of 1.1%, which may justify optimism. On the other hand, that could also make a December rate hike more likely. Investors may be forced to decide which they think is the lesser of two evils. Stock Market Index Analysis Stocks may have made sizeable gains last week, but they ended the week on a sour note, and the S&P 500 (SPX) (SPY) ended the week back on the fence... just as within reach of a breakdown as a breakout. The fact that it's still overbought from the big runup in July leaves it vulnerable, though between the current bigger-picture momentum and the tendency of strength for the end of the year (not to mention election years), the bullish argument holds up relatively well. The daily chart of the S&P 500 illustrates the mixed-up nature of the market's current situation. The slide back under the 50-day moving average line is bearish, as is the failure of the index to successfully break above a minor technical ceiling at 2175. On the flipside, we got a bullish MACD crossover, and even with Friday's lull the S&P 500 has crossed back above its 20-day moving average line. S&P 500 & VIX Daily Chart 5

Chart created with TradeStation That narrow support/resistance range, however, is still contained within another bigger range. The ultimate floor is around 2120, where the 100-day moving average line and lower Bollinger band are converging, while the ultimate ceiling is at 2193, where the S&P 500 peaked last month, and where the upper Bollinger band will be soon. As long as the index remains trapped in that wider range, the matter remains unclear. [Yet, within that range there's some decent trading opportunity.] The daily chart of the NASDAQ Composite (COMP) looks considerably healthier. Though it didn't do well Friday, it reached a record high on Thursday, and still ended the week above all of its key moving average lines. From a trend/momentum perspective, this is inarguably bullish. NASDAQ Composite & VXN Daily Chart 6

Chart created with TradeStation One of the biggest headwinds for the market here continues to be the CBOE Volatility Index (VIX) (VXX), which is "too low." Yet, notice that the VIX has been too low before, and the market has still managed to rally, albeit very modestly. And that may be the biggest risk here. That is, not a major breakdown or a huge rally, but a market that continues to chop around, going nowhere fast. On the other hand, also know that not only are stocks on the bullish side of the table here, but the calendar and the current year favor more upside. Specifically, 'history says that of the past 30 times the market was up between 5% and 20% year-to-date though the middle of September, it ended that year higher. Better still, in eight of the past nine election years, stocks made gains during the last quarter of the year.' (via CNBC). Point being - and as was noted above - the bulls still have the edge here. Fed Funds Outlook While the Fed made it clear now wasn't the rate time for a rate hike, the votes for doing nothing are less and less lopsided, and the FOMC still anticipates one rate hike before the end of this year. It may even be a "have to" scenario, in that it's been talked about for so long, it would look alarming if the Federal Reserve didn't go ahead (or wasn't able to) ratchet rates higher. Either way, the same voting members of the Fed continue to see more rate hikes beyond 2019, albeit gradual rate hikes. Fed Funds Outlook Chart 7

Data provided by Federal Reserve For the record, the FOMC has predicted rising rates in the past, and then didn't follow through on their expectations. If the third and final GDP reading for Q2 comes in above expectations this week though, and if inflation continues to build, the Fed will almost assuredly raise rates in December. Once it raises rates the first time though, it becomes a bit easier to put more in place.