Once again a rally effort that managed to pull the market within reach of a breakout was quelled as the eleventh hour, putting stocks back in the middle of a recent trading range. This third failure - and potential triple top - is likely discouraging to bulls on the sidelines who were waiting for that one last convincing bullish hint before pouring back in.  What are the key market levels to watch here?  We'll dissect the market's current situation, after looking at last week's and this week's major economic news.

Economic Data

Last week was a busy one for the economy... more data than we can chart or discuss. So, we'll stick with the highlights beginning with surprisingly strong retail sales figures for March. Though economists were looking for an overall lull and a flat comparison when taking cars out of the equation, retail spending actually grew 0.9% last month and was up 0.4% not counting automobiles. It was a much-needed reversal of three months of negative comps.

On a month-to-month basis, prices were a bit higher in March with or without food and energy costs factored in. It's still a bit soon to say inflation is mustering, however. The year-over-year annualized inflation rates are still slightly negative despite last month's small upswing. 

Anyone hoping the weather-related plunge in housing starts for February would be countered in March was disappointed. The slight uptick from a pace of 908,000 to 926,000 still left the tally at uncharacteristic lows, and while the number of permits didn't slump as much, there's a discernible slowdown on that front too. 

Housing Starts, Building Permits Chart PH 41915-starts-permits Source:  Thomson Reuters Eikon

Though we've not got a chart of it, it's worth noting last month's decline in industrial production and capacity utilization is becoming something of a trend; both have been weakening since late last year. That's worth keeping an eye on for the foreseeable future -- and those indicators have shown some correlation with the broad stock market performance, as we've discussed previously.

Everything else is on the following calendar:

Economic Calendar PH 41915-econ-data Source:  Briefing.com



The coming week is clearly going to be a light one in terms of economic news. We are going to be getting a big wave of housing data though.... new home sales, existing homes sales, and the FHFA Housing Price Index. After last week's disappointing permits and starts data, the housing market desperately needs a little help.





Stock Market  Index Analysis 

In retrospect, Friday's sizeable pullback could have been somewhat expected. Conversely, it's not like Friday's pullback did any real damage, as we're still above the market's key make-or-break levels. More than anything we remain stuck in a range. The good news (or maybe the bad news) is, we're nearing the point where traders are going to have to commit to bearishness or bullishness.

Normally we'd start our analysis with a look at the daily chart of the S&P 500 (SPX) (SPY). This week though, we're going to kick things off with a look at the weekly chart, so we can get some needed perspective on where stocks are now. As the chart indicates, the 26-week moving average of the S&P 500 at 2057 is still holding up as a floor, but the ceiling at 2115 is also holding up as a ceiling. We've tried to clear it three times now, and failed to do so all three times.  

S&P 500 & VIX - Weekly Chart PH 41915-sp500-weekly Charts created with TradeStation

As you can plainly see, however, there's just not a lot of room left to move around between the floor and the ceiling. The index is going to have to break above 2115 or break below 2057 soon. And once it does, it could move in that direction for a while, following what's now a nine-week consolidation period.


S&P 500 & VIX - Daily Chart PH 41915-sp500-daily  





PH 41915-nasdaq-weekly


Ditto Zooming into the daily chart of the S&P 500 we can add some key details to the bigger-picture analysis. Namely, the index broke under the 20-day and 50-day moving average lines converged at 2084 after bumping into a technical headwind around 2115... a resistance level the index has hit a couple of other times since late February. Also on the following chart, the CBOE Volatility Index (VIX) (VXX) hit a bottom around the 12.5 level for the third time recently.

NASDAQ Composite & VXN - Weekly Chart, the NASDAQ Composite (COMP) (QQQ). That is, the NASDAQ hinted it was going to resume a bigger-picture rally two weeks ago, but the effort was thwarted last week at the same time the Nasdaq Volatility Index (VXN) confirmed a floor at 13.8. On the flipside, the key floor around 4822 has yet to be broken. Until it is, we can assume nothing more than the index is range-bound.

Bottom line? The bears may be in charge as of the end of last week, but this isn't the first time the bears have been in control since February. It's happened twice before, and the market didn't implode either time. In fact, if anything, the market has edged its way closer to a breakout in the meantime.

As for what we're watching, at this point it would take a break under 2050 for the S&P 500 - along with a break above 17.0 for the VIX - to really paint a convincing picture. Conversely, a break above 2117 is also still within reach, and would paint a similarly convincing picture of a breakout. Until one of those two outcomes materializes, it's a waiting game.

Crude Oil Breaks Out Crude Oil Chart, with Fibonacci Lines

PH 41915-crude-oil

It remains to be seen if it will hold or of this is "the" breakout that puts Crude Oil (USO) back into a long-term uptrend, but from a technical perspective, oil has finally fought its way out of a rut and quelled its bearish momentum. If it is truly a new uptrend though, we're looking for the $67.80 level to be a contention point/price. That's where the 38.2% Fibonacci retracement level lies. That area was a little turbulent in early December too.

Whatever's in the cards, there's no denying oil shook things up last week, from a technical perspective. Trade Well, Price Headley  BigTrends.com