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There's no denying that last week's big jump was a fun ride for long-term, buy and hold portfolios . For short-term traders, however, it's the kind of move that can really confuse things to the point where there are no reliable clues as to the market's next trade-worthy move. The really crummy part is that such scenarios generally end up making life difficult for investors as well as option traders.

To the extent that it matters right now (which isn't much), we'll poke and prod the market's technicals below. First though, the bigger economic picture.

Economic Calendar

Though there was a ton of economic data to sort through in the holiday-shortened week, there's little doubt as to what "the" piece of information means the most - employment (or lack thereof).

As it turns out, it was mostly…tepid. Jobs were added to be sure. The government says 155,000 new jobs (net) were created in December, and that number rises to 168,000 when just counting private-sector job growth. It beats losing jobs, but both numbers were slightly less than the prior month's total, and the private payrolls figure was surprisingly weaker than the ADP Employment number for the same month. The payroll company said 215,000 new jobs were created last month, which was a number much higher than anticipated (estimates of 140,000). When it was all said and done, the unemployment rate inched up from 7.7% to 7.8%. How's that? Because the country needs to create about 400,000 jobs each month just to keep pace with the ever-increasing headcount of the nation's pool of workers.

If there was a bright spot from last week, it came from the Institute of Supply Management (or ISM). The organization said its overall index of economic activity' ramped up from 49.5 to 50.7 last month, while its services index grew from 54.7 to 56.1.

Too bad the ISM's budding optimism was trumped by red flags elsewhere. Factory orders were flat for December, falling short of the expected 0.5% increase, and falling short of November's solid 0.8% improvement. Construction spending also fell, to the tune of 0.3%. The pros were looking for an increase of 0.5% for November following October's increase of 0.7%.

Bluntly, given last week's economic numbers, it's surprising the market was able to muster any gain at all. As traders know, however, the avoidance of the fiscal cliff gets most - if not all - of the credit for last week's surge. That's fine, though it presents one problem that we'll discuss below.

Economic Calendar

The coming week is clearly going to be much lighter in terms of the number of economic items we'll be processing. And none of it will be hard-hitting stuff. It will be a welcome opportunity for last week's dust to settle.

Stock Market

When it was all said and done, the S&P 500 (NYSEARCA:SPY) (SPX) gained 64.04 points (+4.5%) last week, with the bulk of that coming on Monday and Wednesday, prompted by the resolution of a nagging fiscal cliff fiasco. That's the best week the market's seen since the end of November/beginning of December of 2011. While the momentum itself is encouraging (for the bulls), the size of the move also gives pause - how much more gas can actually be left in the tank?

Indeed, from a technical perspective, stocks have reached something of a limit, at least in the near term.

Just for some perspective, let's begin with the weekly chart first this week, since that's where technical trouble is most evident. As it illustrates, the S&P 500's surge was capped right when the upper 26-week and upper 52-week Bollinger bands - which are now converged - were brushed. Were the would-be sellers just waiting for the right ambush spot?

[Side note: Last week's close of 1466.47 is the highest weekly close we've seen from the S&P 500 since 2007, though last week's high of 1467.94 isn't the highest high.]

S&P 500 & VIX - Weekly

The CBOE Volatility Index (VIX) (NYSEARCA:VXX) also made its biggest drop we've seen in months, which from a directional point of view is bullish for stocks, but again, too much of anything is still too much. Point being, the bulls and buyers sure didn't leave themselves a lot of room to work with here; one nudge could put all the would-be profit takers into action.

So now what? A look at the daily chart deepens the discussion.

On the daily chart of the S&P 500 we can see something encouraging for the bulls, and something a little unexpected - the index managed to close above both the upper 20-day and the 50-day Bollinger bands two of the last three days of last week. Up until now, either or both upper band line had halted and reversed any rallies. Now, though, the bulls don't seem to care. Take a look.

S&P 500 & VIX - Daily

Were this a normal situation and/or a normal environment, we'd take this at face value and say this was the beginning of one of those few times per year the market makes massive progress in a short period of time. But, this isn't normal situation or a normal environment.

One of the big X-factors, as has already been mentioned, is the response to the fiscal cliff being avoided; who knows how or where that rally's chips will ultimately fall. There's another wild card in play though…the calendar. It's very likely many traders began the new year expecting a bullish January effect, meaning stocks kick off the new year to set the tone for the rest of the year. Thing is, it's possible the mere expectation of that is the very thing that caused the bullish launch into 2013.

The semi-good news is, logical or not, the bullish start to the year is apt to draw more buyers in over the course of the month. That means this early strength truly is a bullish omen. The bad news is, stocks are ridiculously overbought now (NYSEARCA:DIA) (NYSEARCA:IWM) (NASDAQ:QQQ), and facing headwinds they don't normally face. Besides, the bullish start to the year doesn't necessarily lead to a bullish month (or even a bullish year) reliably enough to bet on it.

Bottom line: This week is a crap shoot. Stocks need to pull back a bit to bleed off some of the current overbought pressure, but if there was ever a time that emotions were skewing sanity, this is it. Let's not dig in too deep here (in either direction); just let the dust settle. By this time next week we'll have much more clarity.

Source: Market Outlook - Confusion And The Calendar