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A lot of volatility, but not a lot of net movement. That's the only way to describe last week. The S&P 500 Index (SPX) (NYSEARCA:SPY) only gained (+0.38%) last week, making the five-day period something of a non-event. However, that's not to say last week wasn't important or non-telling. As a matter of fact, a couple of important things became crystal clear.

We'll dissect them both in a second. First, we need to go over last week's major economic numbers (though there weren't many).

Economic Calendar

There wasn't much data last week that was of particular interest. The only thing even worth highlighting Tuesday's consumer credit figure for November; loan balances grew by $16.0 billion, with most of that stemming from student loans and auto loans. Credit card debt was up minimally, by $1.0 billion.

It's an interesting mixed message . It seems as if consumers are widely complaining of poor economic conditions, and credit (revolving) debt is tepidly rising. Yet, auto sales have been at or near record levels, and few seem shy about taking on more debt to go to school, even though the value (cost/benefit) for most programs has been in questions for more than a couple of years now.

All the rest of last week's data is on the table below, though none of it is all that hard-hitting.

Economic Calendar

This week's data is not only more numerous, but also highly important… and apt to move the market, beginning on Tuesday with December's retail sales.

As of the last forecasts, the pros say retail sales should be up 0.2% for last month, or up 0.3% when taking automobiles out of the equation. Given how Tiffany & Co. (NYSE:TIF) warned last week that it hit a headwind this holiday season, one has to wonder if retailers as a whole ran into trouble last month. We'll find out Tuesday, but just know that whatever kind of number we get that morning, the market's going to take it to heart.

Also on Tuesday we'll get a first glimpse of the inflation picture for last month, via the producer price inflation figure. It should be flat overall, but up 0.2% on a core (ex food and energy) basis. That's pretty tepid.

On Wednesday we'll round out the inflation picture with the consumer inflation change for December. Economists are looking for no change overall, and a 0.1% increase on a core basis. As of the last look, the inflation rate is 1.76%; we've yet to see anything close to the hyper-inflation that was supposed to materialize following years of major stimulus.

S&P 500 Versus Inflation Rate

The inflation data isn't even going to be Wednesday's biggest data nugget, however. What we're most interested in is last month's capacity utilization and productivity. We had been concerned that both had rolled over as of August, and continued to hit lower lows all the way through October. It matters, because these two data sets have a high correlation with the economy's strength as well as the market's direction. November's uptick in both numbers was a welcome break in the downtrend. But, we really need to see another uptick for December just to cement the recovery in place.

S&P 500 Versus Capacity Utilization and Industrial Productivity
(click to enlarge)

There are a few more items in the lineup, but the only other one really worth noting is Thursday's look at housing starts and building permits. Though critics have opined that the housing market isn't really recovering, the growth streak in both is going on two years now. If it was an errant move, it would have been exposed by now. Both figures are projected to be at four-year highs.

Stock Market

This week we want to kick off the market's technical analysis with a weekly chart, just because that's the perspective we need… start with the bigger picture first.

Simply put, it's now clear that the S&P 500 is hesitating at the upper 26-week and 52-week Bollinger bands, both around 1477. That's not shocking. In fact, that's as it should be. It doesn't change the fact that, however, the rally is being impeded now. Indeed, it was the approach of the upper 52-week band that ultimately killed rallies and spurred pullbacks in May and October. So, based on history - with a pinch of plausibility - the bulls have something to worry about here.

S&P 500 & VIX - Weekly
(click to enlarge)

You can also see on the weekly chart how the CBOE Volatility Index (VIX) (NYSEARCA:VXX) is once again hovering around that floor of 13.50 (red, dashed). If that is indeed the "too low" point for the VIX, then that's also going to weigh in on stocks… as it did in May and October.

Not much really changes when you zoom into a daily chart. In the daily timeframe, the S&P 500 has so far been unable move above the upper 50-day Bollinger band (nor the 20-day Bollinger band).

S&P 500 & VIX - Daily
(click to enlarge)

Yet, there's one thing clear with the daily chart - the current momentum is bullish. As they say, "the trend is your friend".

So now what? Though the wisest approach to position trading right now may be to stay near the sidelines and not dig in too deep, that doesn't mean we don't want to keep looking for other data or tools that could help us spot the market's true undertow. And is it turns out, we got such a clue this past week.

We've talked about the Trading Index, or 'TRIN', or the Arms Index before, so we're not going to re-explain them now. We'll just refer you back to that explanation by sending you here. You don't even necessarily have to review that explanation - or even fully understand the Arms Index - to believe what the TRIN chart we're about to show you is saying.

In simplest terms, while the broad stock market's breadth (NYSEARCA:DIA) (NASDAQ:QQQ) (NYSEARCA:IWM) (the numbers of stocks that are rising compared to the number of stocks that are falling) may feel healthy of late, the depth (the volume behind the advancers and decliners) isn't. In fact, the bullish volume has become downright lacking.

To illustrate this point, our chart below compares the S&P 500 to two moving averages of the TRIN Index [the actual TRIN Index is too volatile day-to-day to interpret, so we smooth it out with moving average lines. As you can see, the short-term Arms Index/TRIN average has crossed above the longer-term Arms Index/TRIN average (sorry, the settings are proprietary). It's a subtle signal that the market may look bullish on the surface, but under the hood, the smart money is already making its way out the door.

S&P 500 Versus TRIN Moving Averages
(click to enlarge)

If the math or concept still isn't clear, then we can boil it down to a more simple reality... with the TRIN trend now pointing upward, the odds of weakness for stocks is very, very high. As evidence of the theory, just go back to early April and mid-September, when we also saw crosses of the TRIN's short-term average above the long-term average line. Stocks sold off hard in both instances. [Stocks also rallied when we saw the opposite cross of the TRIN's moving averages.]

That's not to so we're assured of a market pullback now just because the TRIN trend is pointed upward. The Arms Index can be confused too, as it was June. More often than not, however, this means trouble for stocks. Added to the fact that the S&P 500 is also faltering at its upper Bollinger bands, and the case starts to get pretty bearish…. at least in the near-term.

Source: Market Outlook - Breadth Is Fine, But Volume Depth Is Lacking

Additional disclosure: BigTrends Rapid Option Income subscribers have an open SPY options position.