Weekly Market Outlook – Saved in the Nick of Time, But Still Hanging by a Thread
As feared a week ago, the selling continued this past week. All told, the S&P 500 fell 1.6% last week, reversing a rally that ran into some fairly serious technical resistance just a few days earlier. This is what you’d expect the long-overdue to look like at its onset.
And yet, it’s still too soon to say that correction is actually underway. Right before closing at a sizable loss on Friday that would have left the market under some critical technical support, the bulls pushed back just enough to turn a bad week into a not-quite-as-bad one. Technically speaking, the bigger-picture rally is still alive.
It’s hanging by a thread though.
We’ll show you the deal in some detail below (as always). First though (also as always), let’s first look at the economic news we got last week despite the federal government’s ongoing shutdown.
Economic Data Analysis
What we didn’t get last week was October’s jobs report, marking the second monthly jobs report we’ve not heard. For what it’s worth though, economists’ were calling for a loss of 60,000 jobs, which would almost certainly inflate the unemployment rate up to 4.5% (from August’s figure of 4.3%). That being said, the ADP employment report suggested growth of 42,000 jobs, handily topping estimates of 22,000, reversing September’s loss of 29,000 jobs. Things may be slightly better on this front than feared.
Either way, we did hear last month’s economic activity measures from the Institute of Supply Management. Manufacturing activity fell slightly rather than inching higher as expected, while services activity improved measurably more than the expectation for only a slight increase.
ISM Services, Manufacturing Index Charts
Source: Institute of Supply Management, TradeStation
Both economic barometers continue to offer some degree of hope.
Everything else is on the grid.
Economic Data Report Calendar
Source: Briefing.com, TradeStation
The only items of any rea interest scheduled for this week are going to be of particular interest. That’s Thursday’s look at last month’s consumer inflation followed by producer inflation data on Friday, when we’re also supposed to hear last month’s retail sales figures.
You’ll notice that consumer as well as producer inflation rates remain fairly nominal through August, even if they were edging a little higher then. It’s unlikely much has changed since then; it certainly doesn’t feel like it has anyway.
Consumer, Producer Inflation Rates
Source: Bureau of Labor Statistics, TradeStation
Retail sales also likely continued their steady uptrends through last month as well, even if a measurable amount of this increase reflects still-rising prices. Consumers appear to be doing their part to keep the economy humming (unless the recent surge in layoffs proves to crimp spending).
Retail Sales
Source: Census Bureau, TradeStation
Of course, we won’t be getting any of this information of the federal government remains shut down even though we were given September’s consumer inflation figures so the Social Security Administration could announce its COLA for 2026.
Stock Market Index Analysis
We kick things off this week with a close-up view of the weekly chart of the S&P 500, since it’s important to paint the bigger picture first. As you can see, after testing the upper boundary of an intermediate-term channel (yellow, dashed) a couple weeks ago, last week the index fell back to that channel’s lower boundary (purple, dashed)… but without falling under it. Technically speaking, the advance since May is still fully intact.
S&P 500 Weekly Chart, with MACD and VIX 
Source: TradeNavigator
Here’s the daily chart of the index, which offers us another curious detail. Note Friday’s bar. The S&P 500 briefly slipped below the 50-day moving average line (purple) on Friday before snapping back above that mark; the intraday swing after sliding under an important technical indicator line is actually noteworthy, even if not exactly rock-solidly convincing.
S&P 500 Daily Chart, with Volume and VIX 
Source: TradeNavigator
And the daily chart showed us something else that was kind of interesting… sort of. That’s the shape of the volatility index, or VIX, at the bottom of the graph. It started to test an important technical ceiling at 23.9 (white, dashed) before peeling back, mirroring the move made by the S&P 500 itself. Testing this resistance is a good first bearish step, but clearly the bears didn’t get the job done on either spot on the chart.
The NASDAQ Composite’s charts look about the same, and tell the same basic story. We were concerned two weeks ago that the index’s encounter with a couple of well-established resistance lines (red and light blue, dashed) would set the stage for some corrective profit-taking. Last week’s 3.0% stumble -- the biggest weekly loss for the NASDAQ since April -- underscores this vulnerability.
NASDAQ Composite Weekly Chart, with MACD and VXN 
Source: TradeNavigator
Still, as the weekly chart also shows (and the daily chart below will detail), the composite is finding some technical support right where it’s need to. At the same time, the NASDAQ’s volatility index – the VXN – also tested an important technical ceiling at 28.5 without actually moving above it. The bears are ready. They’re just not committing enough to push the composite over the edge. In this same vein, notice on the daily chart that the NASDAQ only had to kiss its 50-day moving average line (purple) at 22,665 for the index to reverse course pretty convincingly even if it did slip a bit below the rising support line (yellow, dashed) that’s been steering it higher since May. Again, the bears are ready.
NASDAQ Composite Daily Chart, with Volume and VXN
Source: TradeNavigator
The buyers are almost certainly going to try to build on Friday’s intraday swing headed into the new trading week. And if for some reason the government shutdown end in the week ahead, that will provide them with plenty of inspiration.
The market’s technical ceilings that have been in place for a while now were affirmed last week though. The indexes might test them again soon, but somehow it still looks, seems, and feels like the market’s vulnerable to a correction here. An end to the shutdown may also end up being a “sell the news” kind of moment.
The good news is, those lines in the sand are clearly, and have proven themselves as well. That’s mostly the 50-day moving average lines, or the straight-line support near the 50-day averages. That just makes any break under them all the more meaningful. Conversely, the odds of a meltup -- a break above the established ceilings tested and verified last week -- still seem pretty thin.
Hang tight. We might not get answers this week. We should be getting them sooner than later though. Something just needs to force the issue.