Stocks ended the week mixed this week as investors digested a slew of earnings and economic data. As earnings and economic data continues to be released in droves, it is paramount that we not only pay attention to the actual numbers but how the stocks (and major averages) react to the numbers.  This allows us to see how the market participants are “voting” and helps us filter out the noise and focus on what matters most: price action. We find it disconcerting to see the benchmark S&P 500, Russell 2000, and Nasdaq composite close below their 50 DMA lines while the Dow Jones Industrial Average literally closed on it.

Monday-Wednesday: Leaders Smacked India & Brazil’s Central Banks Cut Rates

The major averages ended mixed on Monday as investors digested the latest round of tepid economic data. However, the real news was the fact that a slew of leaders were smacked in heavy volume! Apple (AAPL), Priceline.com (PCLN), and Google.com (GOOG) were among of the few of the leaders that were smacked in heavy trade. Economic data also failed to impress. Homebuilder sentiment plunged in March which put pressure on a slew of housing stocks and the ailing housing market. New York Manufacturing activity collapsed to 6.56 in April from 20.21 in March. This also missed the Street’s estimate of 18. On a bright note, retail sales rose +0.8% which topped the average estimate for a gain of +0.3%. Stocks opened higher on Tuesday as investors digested the latest round of earnings and economic data. The Commerce Department said housing starts fell an expected -5.8% to a seasonally adjusted annual rate of 654,000 units in March which missed the Street’s estimate for 705,000. Meanwhile, industrial production was unchanged for a second straight month in March which missed a gain of +0.3%. India’s central bank cut rates to help stimulate their economy.
Stocks fell on Wednesday as fresh concerns spread about Spain’s onerous debt levels. In other European news, minutes from the Bank of England showed that only one Monetary Policy Committee member still supported quantitative easing which squashed hopes of anther round of QE. ECB policymaker Jens Weidmann told Reuters that Spain should take care of its own debt woes and ruled out a third long-term financing operation (LTRO) from the ECB. In a surprise OP-ED, Portugal’s prime minister wrote in the Financial Times that the country may not return to capital markets for funds in 2013, as previously expected. Earnings disappointments from IBM and Intel (INTC) also weighed on stocks.

Thursday & Friday’s Action: EU Woes Ease, Stocks Rally

Stocks fell on Thursday as investors digested a slew of economic and earnings data. Demand for Spain’s much anticipated auction was solid but yields were mixed. Spain sold 2.5 billion euro ($3.3 billion) of 2-and 10-year sovereign bonds but yields rose on the 10-year debt to 5.743%, and fell on the 2-year debt to 3.463%. In other news, Brazil’s central bank cut interest rates by 75 basis points to 9% and left the door open for more rate cuts in an attempt to stimulate their economy. A slew of high profile companies released Q1 earnings and most topped estimates. However, news from the economic front was not impressive. Weekly jobless claims rose for the second straight week and missed the Street’s estimate. Existing home sales fell -2.6% for March and missed the Street’s estimate. The Philly Fed Index came in at 8.5 in April which was lower than March’s 12.5 reading and the 10.3 estimate. Meanwhile, the Conference Board’s Index of Leading Indicators rose +0.3% which topped the average estimate for a gain of +0.2%. Stocks rallied on Friday as investors digested the latest round of earnings data, the immediate threat of a Spanish debt woes eased, and sentiment rose in Germany.

Market Outlook- In A Correction