US retail sales increased 0.2% in October and housing starts also grew more than expected to 14%. The positive economy data failed to move the stock markets higher. Major stock indices closed the week in the negative territory again except technology laden NASDAQ composite index which bulked the trend and eked out a gain. For the week, S&P 500 index closed at 2578, down 0.13%, Dow Jones Industrial Average lost 0.27% while NASDAQ composite index increased 0.47%.
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| Weekly chart of S&P 500 index |
After indecision last week, S&P 500 index started to pull back from its record high 2 weeks ago. Momentum indicator of S&P 500 index is still on the extreme overbought region and have room for corrective action. However as the overall momentum is still on the high side, the pull back is viewed as temporary to digest the lofty gain in the past 10 weeks. The index likely will come down, get closer to its 28 week moving average before rebounding higher.
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