Recently, we have seen both the continuation of the Bull Market and last week this ended with some poor results leading to a drop from there. It’s still fair to say there is both good and bad news entering the market and the data at best is sending mixed messages.
Economic Data
The Good News – factory orders grew, the unemployment rate fell, and auto sales were reasonable.
The Bad News – new payroll additions were well below forecasts, construction spending slumped, and consumer credit levels didn’t come anywhere near growing as much as it has been of late.
The one area last week that created the most focus was the jobs data and the message was clearly mixed. The aggregate of the numbers verify that the jobs picture is getting better. The number of total unemployed seems to be falling, while the total number of employed is rising.
This week there is little in the way of economic data other than towards the end of the week there is the PPI (Producer Price Inflation) and Consumer Price Inflation. Both are expected to be higher for March.
Stock Markets
Last week was the second losing week in the last three, and only the fourth losing week in the last sixteen. We have seen some positive results over the last few months but I can’t help but ask if the recent declines is an omen of the long-overdue correction and maybe is now starting to unfold?
The CBOE Volatility Index (VIX) is starting to test its trading range. In fact, the VIX’s 50-day moving average line is clearly under pressure as a ceiling. I expect a further tranche of unexpected bad news could push the VIX above this ceiling and this could out the pull-back (and market drop) into motion.
At the moment, this is just conjecture but could clearly be the next big move for the markets.
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