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Despite a lethargic start to last week, Friday's surge led the index to a weekly gain of 0.67%. It was the fifth winning week in a row, and again took the market to new multi-year highs. The S&P 500 (SPX) (NYSEARCA:SPY) has now rallied 11.8% off the mid-November low.

Is there any more room for upside? Maybe, though the size of the gain so far isn't the bigger problem. We'll poke and prod the market below, but first we need to take a step back and look at last week's major economic data.

Economic Calendar

As was noted a week ago, last week's economic news calendar was chock full of goodies, and it didn't disappoint. There's no way we could touch on all the items, so we'll have to stock with the most important ones beginning with the most important one of all… the late snapshot of the nation's employment situation.

In a word, it wasn't great. Total new (net) payrolls only reached 157,000, well shy of forecasts for 180,000 new jobs, and oddly shy of ADP's employment change figure of 192,000 from earlier in the week. It was bad enough to let the unemployment rate creep up from 7.8% back to 7.9% (while the pros were looking for unemployment to move back a notch, to 7.7%).

So what were the bulls celebrating? The fact that the Department of Labor went back and revised - in an upward direction - the payroll growth from December and November. Now the government is saying 196,000 new jobs were created in December rather than the initially reported 155,000. And for November, 247,000 new jobs were added, well up from the 161,000 first assumed.

It's a bullish reversal of fortune to be sure, but perhaps not celebration-worthy. While it's good news for those 247,000 people with jobs, it's also data that's two months old, and January's figures were still pretty weak. The economy needs to consistently add more than 200,000 new jobs to really grow with any meaning.

And coincidentally, we didn't get that broad economic growth last quarter, even with the surge in new jobs for November (and to a less degree in December). Q4′s GDP actually contracted by 0.1%… the first contraction since 2009. If more people were working, they weren't doing much.

'Mixed-message-itis' also infected consumer confidence in January. The Conference Board's consumer confidence reading fell from 66.7 to 58.6 - a huge plunge - while the final January reading for the Michigan Sentiment Index ramped up from 71.3 to 73.8. That's also a tad lower than December's final score of 72.9.

The only measurable good news came early in the week with December's durable orders total. They were up 4.6% overall (with transportation), and up 1.3% when excluding planes, trains, and automobiles. It was the second month of progress for durable orders.

Everything else is on the grid below.

Economic Calendar

The coming week will clearly be a lighter one again. The only item we're really interested in is Monday's factory orders, which are supposed to be up 2.4% for December (jiving with the balloon in factory orders for the same month).

Yes, consumer credit levels are due out on Thursday, and they should be big again (up by $11.9 billion). But, that's an old - and expected - story at this point, and will likely only move the market if it rolls in much higher or much lower than anticipated.

Stock Market

Just for perspective, we're going to start with the weekly chart this week. On it you can see just how far past the likely ceiling the S&P 500 has run. Since, well, for years now either the upper 52-week Bollinger band or the upper 26-week Bollinger band - or both - have contained the index. Not this time though. This time, the S&P 500 has managed to close above both upper band lines.

S&P 500 & VIX - Weekly

So should we be scared, or excited? Good question.

On the bullish side of the fence are the obvious arguments… momentum, and investors' insistence on seeing things in a bullish light. Case in point: Stocks rallying because November's payroll growth was revised higher, and despite the fact that last quarter's GDP actually fell for the first time in more than three years.

Another modest bullish hint that we haven't seen in a while - rising bullish volume. Last week's surge was backed by higher than average volume. It wasn't just Friday's pop that saw plenty of volume either. Tuesday (the only other bullish day of last week) was also a high volume day. Between the two days, it was enough to at least offer a glimmer of hope.

The bearish argument is just sheer sanity; can stocks really justify a 7.9% gain in just five weeks, especially considering earnings for Q4 have been mediocre, at best?

To be fair, the size/distance of the uninterrupted gains for the past five weeks - or for the past eleven weeks - isn't the entire issue. It doesn't help, but it's not the entire issue. As was noted, the market's marching into territory we've not seen in years, and doing so in a manner that we've also not seen in years. It's times like this that investors can turn into a mob, and turn on a dime.

Does anything change with a look at the daily chart? Not really. The market looks just as overbought, but looks like it has just as much momentum. And in both charts we can see just how oddly low the CBOE Volatility Index (VIX) (NYSEARCA:VXX) is. Something's got to give with the VIX sometime, and that will likely weigh in on the market.

S&P 500 & VIX - Daily

Bottom line? In trading, the trend is your friend, and as impossible as it seems, the current trend says we have to be bullish. You've seen the charts though. What the market is doing right now is very unusual. The market (NYSEARCA:DIA) (NYSEARCA:IWM) hasn't let this situation last for too long in the past.

Anyway, just to underscore our look at the S&P 500, let's cross reference it with a similar look at the NASDAQ Composite (COMP) (NDX) (NASDAQ:QQQ). Bad news; the NASDAQ Composite isn't at new multi-year highs like the S&P 500. It's a problem, largely because the NASDAQ is supposed to lead the market, higher and lower. To see it lag now suggests there may not be enough 'umph' behind the broad rally to keep it going much longer.

NASDAQ Comp & VXN - Daily

Note that the NASDAQ's Volatility Index (VXN) is also suspiciously low, testing its lower Bollinger band. We'll keep tabs on the NASDAQ this week too, and update it if needed for next week.

Source: Can The Stock Market Rally Continue Without The Nasdaq's Help?

Additional disclosure: BigTrends Rapid Options Income clients have an open SPY options position.