Following through on the bullish end to the previous week, stocks logged another net winner last week. All told, the S&P 500 advanced 0.7%, while the NASDAQ jumped 2.2%. Both reached new records in the process.
And yet, it’s anything but the kind of action the bulls would like to see. Not only has the market now pushed deep into technically-overbought levels, but the NASDAQ Composite just bumped into a major technical ceiling. Both of the indices also suspiciously peeled back from their intraweek highs, which is the sort of action you might expect to see right after a blowoff top, and in this case, an exhaustion gap.
In other words, the bulls’ effort to keep things moving higher may have just inadvertently burned up the last bit of remaining fuel the rally had in the tank.
We’ll look at the matter in some detail below. First, let’s look at the economic reports we are getting, as well as point out the ones we’re not getting.
Economic Data Analysis
The now-month-long government shutdown is still in effect, preventing certain economic data normally released by government entities from being released. Last week we didn’t get the initial estimate of Q3’s GDP (Bureau of Economic Analysis), nor did we get September’s measure of personal incomes and consumer expenditures (Bureau of Labor Statistics) that the Fed reportedly considers when making interest rate decisions. With the notable exception of inflation -- to help determine 2026’s Social Security COLA -- most government-supplied data is now a month behind.
We did get home price numbers from the FHFA on Tuesday though, along with the Case-Shiller Home Price Index on the same day. Frustratingly, they continue to move on opposite directions, making it difficult to know which one is telling the actual story. For what it’s worth though, we’re more inclined to take the Case-Shiller data at face value as a pricing barometer for real estate.
Home Price Index Charts
Source: FHFA, Standard & Poor’s, TradeStation
We also heard the Conference Board’s report on October’s consumer sentiment on Tuesday, rounding out the sentiment measure supplied by the University of Michigan a week earlier. As expected, the Conference Board’s number fell a bit to 94.6, although that wasn’t quite as low as the expected 93.2. Whatever the case, consumers are clearly feeling pretty discouraged. Lingering inflation and the lethargic economy are the key culprits.
Consumer Sentiment Charts
Source: Conference Board, University of Michigan, TradeStation
Everything else is on the grid.
Economic Data Report Calendar
Source: Briefing.com, TradeStation
This week isn’t likely to be too busy, particularly if the federal government remains shut down. We’ll preview as if we’re going to hear everything on schedule though.
First, we’ll be getting updates on the key economic barometers from the Institute of Supply Management. Look for the manufacturing report on Monday, followed by the services data on Wednesday. We’ve been seeing these two data sets move in opposing directions, with U.S. manufacturing being the constructive one. We’d like to see both climbing, obviously.
ISM Services, Manufacturing Index Charts
Source: Institute of Supply Management, TradeStation
As it stands right now, we’re slated to get October’s jobs report on Friday. As the chart below shows us, the aforementioned economic lethargy is taking a slow and steady toll on the labor market. It’s not “bed” yet, but the slow-moving trend could become a more significant problem if something doesn’t change soon.
Unemployment Rate, Payroll Growth Charts
Source: Bureau of Labor Statistics, TradeStation
As a reminder, we’ve also not yet heard September’s unemployment and payroll growth numbers. We could hear these figures at the same time, if the shutdown ends in time, although it’s also possible the Bureau of Labor Statistics will quietly release them before then if for some reason the stalemate ends before Friday.
Stock Market Index Analysis
Yes, the market saw some gains last week, adding to the forward progress seen during the previous two weeks. Take a closer look at the daily chart below though. All of last week’s gain materialized on Monday. After that the bulls actually lost most of their drive… which makes a little sense. The S&P 500 also bumped into a pretty important technical ceiling (yellow, dashed) on Tuesday and Wednesday, which has now capped a rally effort four times since early July; see the red arrows for each instance of this.
S&P 500 Daily Chart, with Volume and VIX 
Source: TradeNavigator
Now go back to Monday’s bar on the daily chart above… the one with that left a big gap behind thanks to the strong, bullish open. It’s the gap (circled), in fact, that we want to talk about. Not that it always pans out this way, but sometimes – maybe even “often” at the end of a prolonged rally – gaps end up serving as the “last gasp” thrust seen that ends up serving as the peak (although the gap, or distance between the prior day’s high and the gap day’s low, is usually a bit wider than this).
Zooming out to the weekly chart put the play on/off this rising technical ceiling in perspective; it also reminds us there’s a corresponding technical floor (purple, dashed) that’s running parallel with the ceiling in question. More than anything though, notice that the weekly bar itself is a doji, where the open and close are essentially the same number. In this case the matching numbers are also markedly less than the intra-week peak, which is also something you’d expect to see at the end of a rally and the pivot back into a pullback.
S&P 500 Weekly Chart, with MACD and VIX 
Source: TradeNavigator
The daily chart of the NASDAQ Composite looks similar, in the sense that Wednesday’s high bumped into a rising technical ceiling (light blue, dashed) that extends all the way back to May. And like the S&P 500, the composite is also being steered higher by a rising technical support line (yellow, dashed) that extends back just as far.
NASDAQ Composite Daily Chart, with Volume and VXN
Source: TradeNavigator
That’s not the biggest bearish worry here, however. That’s only a near-term concern. The bigger worry at this time is the fact that after its 60% runup from April’s low the NASDAQ also (finally) bumped into the upper boundary of a rising channel that’s been in place since late-2022 (red, dashed on the weekly chart below). The bears are certainly likely to make a stand here, and now. The weekly chart of the NASDAQ Composite also shows us a much wider potential exhaustion gap with Monday’s big bullish opening, underscoring the bearish potential here.
NASDAQ Composite Weekly Chart, with MACD and VXN 
Source: TradeNavigator
And yet, we’re still not in the bearish camp. We’re only eyeing the exit of the bullish camp, recognizing that the market’s simply come too far, too fast in too little time and is now too overvalued. It feels like the only thing really driving this really now is FOMO (fear of missing out), but that’s not something that can last forever. Once it finally reverses course, it’s likely to do so in a big way in a hurry.
There’s the rub. The stage is set for a long-overdue corrective move, but the market continues to climb a wall of worry anyway.
The good news is, we still know exactly what we’d want to see before presuming a true, full correction is underway. Both volatility indexes (the VIX and the VXN) will need to move above their recent highs at the same time the S&P 500 and the NASDAQ Composite fall under their 50-day moving average line (purple on both daily charts above). Anything less, and the bulls are still in charge, hammering out more rally.