Even with Thursday's and Friday's lull, the shortened-trading week was a bullishly productive one. The S&P 500 (SPX) (SPY) ended the week at 1917.78, up 2.8%. On the other hand, most of the major indices are now squarely in the middle of some pretty significant support and resistance levels - they need to make a stronger commitment to one direction or the other before becoming trade-worthy. The bias, though, is bullish in many ways.

We'll dissect the market's upside and downside in a moment.  Let's first review last week's economic news, and preview what's in the cards for the economy this week.

Economic Data

It was a pretty big week last week, in terms of economic data.  We got key updates on inflation, industrial production, and real estate. In no particular order...

Housing starts and building permits issued in January weren't bad, but they weren't great either. Starts came in at a pace of 1.099 million, down from December's pace of 1.143 million. Permits came in at 1.202 million, down just a bit from the previous month's reading of 1.204 million. All the same, the bigger trend in both cases remains bullish.

Housing Starts and Building Permits Chart http://www.bigtrends.com/wp-content/uploads/2016/02/022116-starts-permits.png Source: Thomson Reuters

As for industrial production and capacity utilization, we got surprisingly good readings from both. Productivity was up 0.9% versus expectations for growth of only 0.3%, while capacity utilization grew from 76.4% to 77.1%.  Not that one month makes a trend, but this was a much needed victory in terms of industrial productivity. As the chart indicates, both were starting to wane, such January's jolt restores a fair amount of hope. Another "up" would go miles with investors.

Capacity Utilization and Industrial Production Chart http://www.bigtrends.com/wp-content/uploads/2016/02/022116-capacity-productivity.png Source: Thomson Reuters

Finally, it looks like any concerns regarding a lack of inflation may not have been merited. Though still not rampant yet, inflation continues to improve in a healthy manner.  The consumer inflation rate now stands at 1.37%, and removing food and energy from the equation, the rate stands at a full 2.2%. Producer inflation has yet to reach those levels, but across the board inflation is picking up again as the effects of weak oil prices are now over a year old. The Federal Reserve will need - or lease want - to contain this soon, using interest rate hikes.

Inflation Chart http://www.bigtrends.com/wp-content/uploads/2016/02/022116-inflation.png Source: Thomson Reuters

Everything else is on the following grid:

Economic Calendar http://www.bigtrends.com/wp-content/uploads/2016/02/022116-econ-data.png Source: Briefing.com

This week will be as busy, though not much of this week's data should be significantly market-moving.

It's going to be another big week for real estate... this time, we'll hear about January's existing home sales, and home prices. The Case-Schiller Index as well as the FHFA Housing Price Index are both expected to continue their upward trajectory through December's numbers due this week.

Case-Schiller Index and FHFA Housing Price Index Chart http://www.bigtrends.com/wp-content/uploads/2016/02/022116-home-prices.png Source: Thomson Reuters

We're also going to get a big update on consumer sentiment. The Conference Board's consumer confidence measure is projected to fall slightly, while the Michigan Sentiment Survey is also projected to peel back a bit. It's been gradual, but consumer confidence has turned unimpressive over the course of the past year or so.

Consumer Sentiment Chart http://www.bigtrends.com/wp-content/uploads/2016/02/022116-sentiment.png Source: Thomson Reuters

Stock Market Index Analysis

We have to give the bulls a decided victory for last week, but winning one battle doesn't win the war. There still a lot for the market to overcome before we can say the bigger trend is bullish enough to confidently wade into just yet. But, all big trends must start out as small ones, and the bulls at least took a small step.

The chart of the S&P 500 shows this modest bullishness fairly well. The index hurdled the 20-day moving average line (blue) at 1893 on Tuesday, and though it stumbled on Thursday and Friday, it still managed to hold its ground.  In fact, Friday's intraday action shows the bulls were starting to pour back in again even before the index had a chance to test the 20-day moving average line as support.

S&P 500 & VIX Daily Chart http://www.bigtrends.com/wp-content/uploads/2016/02/022116-sp500-daily.png Chart created with TradeStation

You'll also see the CBOE Volatility Index (VIX) (VXX) ended up breaking under its 50-day moving average line (purple), and has plenty of room to continue moving lower before any sort of floor is found.

That's the good news. The bad news is -- and bear in mind it's not necessarily bearish news -- the Percent R line has yet to move above its 80 threshold, while the MACD lines are still below the zero level. The MACD lines do show a bullish divergence, but bullish divergences means so much more when they materialize with both lines in bigger-picture positive territory.

It's possible we could get the Percent R line into confirmed positive territory this week, with the MACD lines plausibly moving into positive territory the following week. The trouble is, there's a huge layer of resistance above for the S&P 500...  the entire span between 1954 and 2030. The lower edge of that boundary is where the 50-day moving average line is, while the upper edge of that resistance zone is where the 200-day moving average line (green) is. That's going to be a lot for the buyers to overcome. We'll just have to wait and see how it plays out.

The daily chart of the NASDAQ Composite (COMP) doesn't look all that different, but it's worth noting the NASDAQ actually did test its 20-day moving average line as a floor on Friday, and the bulls passed that test.

NASDAQ Composite & VXN Daily Chart http://www.bigtrends.com/wp-content/uploads/2016/02/022116-nasdaq-daily.png Chart created with TradeStation

Interestingly, the Nasdaq Volatility Index (VXN) wasn't able to break under its 50-day moving average line on Friday. It still may do so this week, but again, we'll just have to wait and see how that plays out.

Either way, the NASDAQ has some room to run before it hits its first resistance area currently around 4687.

With all of that being said, the weekly chart of the S&P 500 may be the most important one to keep close tabs on right now. A floor at 1812 has been pretty-well-established, and a support line at 1867 is still in play. While in the short run there's a little room for the market to keep edging higher, the fact of the matter is the bulls are still on the ropes in the bigger picture, and those floors may come back into play again sooner or later.

S&P 500 & VIX Weekly Chart http://www.bigtrends.com/wp-content/uploads/2016/02/022116sp500-weekly.png Chart created with TradeStation

The weekly chart of the S&P 500 also reminds us that the 200-day moving average line - and all the longer-term moving average lines for that matter - are sloped downward now, indicating an undertow that's more bearish than bullish. The bulls have their work cut out for them.

One thing the bulls do have working for them on the weekly chart is the fact that the VIX really does have room and reason to keep moving lower. The question is, will that be enough?

Blame the Energy Sector for Q4's Lousy Earnings

Last week we updated the broad market Q4 earnings results. This week we'd like to zoom in a bit and look at exactly what changed - at the sector level - between the market's Q4-2014 earnings report and the Q4-2015 earnings results. The overall earnings decline from $26.76 then to $25.35 isn't difficult to explain... the Energy sector (XLE) gets the blame. The energy sector added $2.00 to the S&P 500's per-share bottom line in the fourth quarter of 2014, but subtracted $1.37 from it last quarter. That's a $3.37 swing in the wrong direction.

S&P 500 Earnings Contribution Stratification, Q4-2014 vs. Q4-2015 Chart http://www.bigtrends.com/wp-content/uploads/2016/02/022116-sp500-earnings-breakdown.png Data provided by Standard & Poor's

That's not say every other sector grew its bottom line last quarter, but none of them lost that much ground. We can say this... had it not been for oil's implosion, we would have seen a pretty respectable improvement in the fourth quarter's total earnings.

Trade Well.