The bulls had a chance to defang the bearishness hinted at by a sudden and fairly sharp reversal from a couple weeks back. They even did so for a while. But, when push came to shove later in the week, it was the bears doing all of the shoving again to leave stocks in the red for a second week in a row.
And yet, it’s still not like the market is too far gone to salvage and rekindle the bigger-picture uptrend. It’s skating on thin ice to be sure. But, the bulls still have a chance.
The scary part? Not even the long-awaited reopening of the federal government inspired the bulls. If anything they “sold the news.”
We’ll look at all of it in detail in a moment. The first thing we want to do is look at what little economic news we actually got last week, and preview the mountain of economic data that’s likely going to be dropped this week.
Economic Data Analysis
The federal government shutdown may be officially over, but it’s not up-and-running back at full speed just yet. We didn’t get October’s inflation report, for instance. We should get these numbers (along with September’s) sometime in the week ahead. All we can do right now is show you where we last left off, although we can add that economists are anticipating consumer inflation rates to hold at just above 3.0% for the still-missing data.
Consumer, Producer Inflation Rates
Source: Bureau of Labor Statistics, TradeStation
What little we did get is on the grid.
Economic Data Report Calendar
Source: Briefing.com, TradeStation
This week is going to be a busy won, not just because of the regularly-scheduled stuff, but also because so many government agencies are likely going to dump all of their overdue reports with little to no warning. We’ll cover that as best we can when the time comes, but for now we’ll only preview what’s actually on the schedule, beginning with Tuesday’s capacity utilization and industrial productivity update for October. You’ll see both have been less than thrilling of late.
Capacity Utilization and Industrial Productivity Index Charts
Source: Federal Reserve, TradeStation
Look for last month’s housing starts and building permits data on Wednesday. Don’t, however, look for any turnaround from either anemic or even downright-bearish data set.
Housing Starts and Building Permits Charts
Source: Census Bureau, TradeStation
On Thursday we’re expected to hear September’s payroll growth and unemployment rate data from the Bureau of Labor Statistics. Given the job cuts announced since we last heard any of this information (for August, in September), it’s unlikely we’ll see any meaningful progress. We might see some continued deterioration. (Any growth, of course, has the potential to jolt the market higher.)
Payroll Growth and Unemployment Rates Charts
Source: Bureau of Labor Statistics, TradeStation
Also on Thursday look for October’s existing home sales figures… numbers we’ve still been getting from the National Association of Realtors even if we’ve not been hearing from the Census Bureau about new-home sales. Look for sales of existing homes to remain tepid.
New, Existing Home Sales Charts
Source: Census Bureau, National Assn. of Realtors, TradeStation
New home sales might be updated next week. Whether or not it is, we don’t expect August’s surge to be repeated.
Finally, on Friday we’ll hear from the University of Michigan about its third and final look at consumer sentiment for November; we won’t get the Conference Board’s number until next week. Sentiment of course remains pretty lousy, and understandably so.
Consumer Confidence Charts
Source: Conference Board, University of Michigan, TradeStation
Just bear in mind that not all of these release dates are etched in stone, with most government agencies still scrambling to get back in the office and get back to work. Also bear in mind that we could -- and likely will, in some cases -- get two months’ worth of data simultaneously. Buckle up.
Stock Market Index Analysis
This week’s analysis starts with a look at the weekly chart of the NASDAQ Composite… an unusual starting point, but the right one this time around since it so effectively tells the “bigger picture” story we can then frame the details around. As you can see, the bump into the upper boundary of the long-term channel we saw two weeks ago (circled) did end up meaning something. Although the index did spend some time on positive territory last week, when all was said and done the bulls weren’t willing to remain bullish as the trading week came to a close. The composite fell about 0.5% last week, which isn’t brutal, but is telling.
NASDAQ Composite Weekly Chart, with MACD and VXN 
Source: TradeNavigator
It isn’t catastrophic to be sure. As the weekly chart of the NASDAQ above also shows us, the index appears to be finding support at its 50-day moving average line (purple), and still hasn’t broken below the straight-line support (dashed, yellow) that’s right in the middle of the rising trading range that’s been in place since 2023. You’ll also notice that the NASDAQ’s volatility index (VXN) once again tested a horizontal ceiling around 28.5 (marked with a red arrow) without actually hurdling it. This is a sign that the bears may not quite be ready to commit to pushing the market over the cliff, so to speak.
The daily chart of the NASDAQ Composite below adds some detail to the discussion. As you can see, the index did briefly dip under its 50-day moving average line (purple) at 22,835 on Friday, but ultimately managed to fight its way back above it.
NASDAQ Composite Daily Chart, with Volume and VXN
Source: TradeNavigator
The daily chart of the S&P 500 did the same, as you can see. In fact, the S&P 500 recovered well enough on Friday to leave the index with the slightest of gains for the week. Like the NASDAQ Composite though, there’s no denying the weight of the big runup from April’s low is now making it tougher to add more gains, while making it easier to drag stocks lower. The S&P 500 is finding less and less support…
S&P 500 Daily Chart, with Volume and VIX 
Source: TradeNavigator
… something that’s even more evident with the weekly chart. The weekly chart, of course, also verifies there’s a pretty important technical support line (purple, dashed) that’s still well intact. Like the NASDAQ though, the S&P 500 is on the brink of falling into more serious, less-manageable trouble. Namely, the S&P 500’s volatility index (VIX) remains on the brink of punching above its technical celling at 23.5 (red, dashed), which would likely happen around the same time the S&P 500 falls under its current support line… if it does so. A bearish cross of the MACD lines -- which is clearly taking shape -- will seal the deal.
S&P 500 Weekly Chart, with MACD and VIX 
Source: TradeNavigator
Sit tight for the time being. The tricky part here is the time of year. This stretch tends to be bullish, bouncing from the September swoon that usually bleeds into October. We clearly didn’t get that this year, which make things tricky to navigate now. We only know a correction is overdue. We just don’t know when it’s actually going to happen. It’s certainly not happening yet, even if it is just one or two bad days away from starting.
Conversely, there’s not a lot of upside potential here no matter how you slice it.