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Hey, it may not have been wildly bullish last week, but even the smallest of gains - in spite of a clear prompt - at least means the bleeding was stopped. The question is, will it stay stopped? It's too soon to say we're out of the woods yet, but the bulls have set themselves up for a very good shot at reigniting the bigger bullish trend.

And as you're about to see, there are many potential reasons why in this week's multitude of economic numbers.

Economic Calendar

Perhaps a lack of economic news last week was just what the doctor ordered…nothing bad to bomb the market after a painful three-week stretch of alarming economic data. Whatever works.

That said, we did get a couple of nuggets last week on the real estate front. Existing home sales sold at an annual pace of 4.62 million in April, while new home sales rolled in at a pace of 343K. Neither was dramatically strong, but both were better than March's numbers, and both were near inline with expectations.

On the flipside, durable orders growth was tepid, and negative if you don't count automobiles. April's orders only grew by 0.2%, and actually fell 0.6% when removing transportation from the equation. The ex-transportation number fell well short of the expected 1.0% improvement.

Economic Calendar

Clearly there's too much in the lineup this week to preview all of it; we'll just have to hit the highlights.

Tuesday: Will the Conference Board's consumer confidence levels mirror the improving ones from the Michigan Sentiment Index (which just hit the highest level since October of 2007)? If so, it would speak volumes in favor of the bull market.

Thursday: We'll get an omen of the official government jobs-growth number (on Friday) with the ADP employment change figure. The expected increase of 145K is better than last month's disappointing 119K new payrolls, but it's still not great.

Friday: Buckle up, 'cause it's gonna be a big day. We'll get that official jobs-growth number; the pros are looking for 172K new private ones. The unemployment rare should roll in at 8.1% again. We'll also hear last month's auto sales, though we're not looking for anything dramatic in either direction.

Stock Markets

Good news - the S&P 500 Index (SPX) (NYSEARCA:SPY) fought its way back above the 200-day moving average line (green) last week. It was a 'just barely' situation, but the deed was done all the same. Even when the bears pushed back on Friday, the bulls used the 200-day line as a floor. All told, the SPX gained 1.7% last week following a three-week rout. Take a look.

S&P 500 - Daily
(click to enlarge)

The question is, can the market build on last week's bullish effort, or was it just a dead-cat bounce that's bound to reverse this week?

There's still no clear answer, but the odds favor at least a little more near-term upside. The CBOE Volatility Index (VIX) (NYSEARCA:VXX) still has plenty of room to move lower… before it hits a wall. And, with the high-to-low span for the S&P 500's entire dip being about 8.5%, the selloff has sufficiently brought about a capitulatory mindset. That'll do for now, assuming nothing out of Europe fires any more surprise torpedoes at us.

Even so, the bigger question remains - will the bigger bullish trend (NASDAQ:QQQ) (NYSEARCA:DIA) (NYSEARCA:IWM) resume with a little more bullish traction, or is it just a short-term reprieve before we ultimately move to lower lows (say in July or August)?

At this point, it could go either way. The lower 20-week Bollinger band (orange) is waiting to act as a floor at 1287, and the 40-week (200-day) average line is also right there. Neither of those potential floors did the weekly chart of the S&P 500 (below) any good last August, but more often than not, those band lines to contain the index, and reverse trends when brushed.

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

Bottom line? From a technical perspective, we see more upside than downside, though there's a fair amount of both out there right now. Traders aren't quite sure what to do here, and that's going to keep things muted in either direction for a while.

So that was the technical perspective. What about the fundamental reality (especially now that earnings season is over)? In simplest terms, trailing and projected earnings still support the bigger bull market, even if they can't stave off a short-term rough patch like the one we just went through.

As it stands right now (through the end of Q1), the S&P 500 is trading at a P/E of 13.44. That's not as cheap as it was when the P/E hit 11.95 in September of last year, but the current reading is pretty much rock-bottom compared the last 22 years.

S&P 500, with Earnings & P/E Ratio

(click to enlarge)

What's going on? Why are people so averse to owning stocks when they're pretty much as cheap as we've seen them in a couple of decades?

In simplest terms, fear has hijacked the market. Traders are fearful that the projections are unattainable targets.

It's understandable, considering how nobody saw the 2008 crisis reaching the magnitude it did, and few saw the 2001 meltdown coming. Having been burned too many times, investors are understandably skeptical now.

The whole thing brings up a philosophical idea though - bear markets aren't likely to start when they're widely expected. Yes, it's a contrarian notion, but contrarianism tends to work regardless of the timeframe in question. If this were really a recession or a bear market (or both) around the corner, the masses would either be ignoring it, or denying it. There's actually quite a bit of agreement on the matter now, giving stocks a wall of worry to climb.

Point being, we actually remain long-term bulls no matter what the market is ready to do in the near-term.

Source: Weekly Outlook: Can Low P/E Ratios Stop The Market's Bleeding?