Last week was a hard fought battle for both the bulls and the bears -- each day was a swing in the opposite direction form the prior day, and most of those counter-moves were pretty dramatic. All told though, the bears won the contest. Don't freak out just yet, however, as the very light (holiday-based) volume says last week's moves weren't necessarily the majority opinion.

On the other hand, last week's moves still put the indices into a situation they'll need to deal with this week and beyond. Indeed, firm battle lines have been drawn.

We'll take a look at all of them below, but first let's start with a view of the bigger picture factors by discussing the key economic numbers from last week.

Economic Outlook

If we had to give the economy a grade for last week's results, it would probably be a C-. Things that were encouraging were VERY encouraging, but they were well offset by the quantity and quality of things that were discouraging.

On the 'encouraging' side of the fence, new as well as ongoing unemployment claims were both well under expectations, and both hit new multi-year lows; the progress is undeniable now after each waffled for several months... sort of. While the readings of 407K and 4.182 million (respectively) were each new-low scores, (1) the continuing claims number isn't counting the other 4 million people who are still on emergency benefits, and (2) the 'new' layoffs may not be as high as the previous readings simply because there are fewer people left to layoff now.

Other good news included the Q3 GDP growth of 2.5%, versus the expectation of 2.4%. Personal income and personal spending were both positive too, up 0.5% and 0.4%, respectively. Consumers were feeling better about those improvements as well, with the Michigan Sentiment Index rolling in at 71.6 for October, topping the previous estimate of 69.3.

Economic downsides for last week include dismal durable orders, off by 3.3% with cars, and lower by 2.7% excluding autos. The pros were looking for big growth on both fronts.

Real estate took one on the chin as well. Existing home sales came in at an annual pace of 4.43 million, and new homes were sold at an annual pace of 283K. To some extent the time of year can be named the culprit, but both numbers continue to point to problems.

Real Estate Activity/Data Chart vs SPX


Other key numbers can be found on the table below, along with next week's biggies.

Economic Calendar


Clearly it will be a busy week, kicking off with the Case-Shiller home price index and Consumer Confidence on Tuesday. The former should be up 1.0%, with the latter up to a reading of 59.8.

On Wednesday we'll hear the Challenger Job Cuts number. Recently it's been a pretty good omen of the unemployment rate figure, which comes out on Friday (which is expected to hold steady at 9.6%). New and initial claims are expected to roll in a little higher on Thursday though, with private nonfarm payroll additions expected to be 140K, down from September's 159K added jobs.

There's a lot more slated though; it's all on the table above.

S&P 500 Index Outlook

Rather than take a long and detailed look at the S&P 500 this week, we're actually better served by slicing and dicing all three major indices.

As for the S&P 500, Friday's 8.95 point (-0.75%) pullback left the index at 1189.40, 10.33 points (-0.86%) below the prior week's close. While we don't want to read too much into it, the move lower dragged the index under the 20-day moving average line. While it's a bearish sign, notice the SPX has been dancing all around that mark for two weeks now -- traders just can't decide.

One thing the bulls have going for them (sort of') is the VIX, which poked sharply higher on Friday and came close to a brush with its upper Bollinger band; that's been a reversal point - bullish for stocks - more often than not. Still, it's a feeble clue.

The big hints as to the S&P 500's next major moves are either a close above the recent ceiling at 1199, or a move under the 50-day moving average line (purple) at 1176, which also happens to line up with a recent support line; the range is framed by red, dashed lines.

SPX Daily Chart


NASDAQ Composite Outlook

There's not a lot to add about the NASDAQ Composite that wasn't said about the SPX. It too has been waffling around the 20-day moving average line, leaving behind several gaps in the process. Friday's 8.56 point (-0.34%) pullback left it at 2534.56, which was still 16.4 points (+0.65%) better than the prior week's closing level.

One oddity to note about the NASDAQ though. Its volatility index (the VXN) isn't even close to pressing into its upper Bollinger band yet. The implication is that we haven't yet seen a hard bottom.

NASDAQ Comp Daily Chart


Dow Jones Industrial Average

And finally, it's actually the Dow Jones Industrial Average that's proving the most telling and predictive this week, mainly because it confirms what has only been hinted at with the other two indices.

In simplest terms, the market is caught between the support of its 50-day moving average lines, and the resistance of its 20-day moving average lines. They're purple and blue - respectively - on all of our charts. It's with the Dow, however, that we can plainly see how meaningful these boundaries are; every major high and low over the last week and a half has been defined by one of those two moving averages.

Implications? If the market is going to be bullish, the Dow needs to hurdle 11,215. If it's going to be bearish, the Dow will have to fall under 11,067. Something's got to give soon though, as the two moving averages are on an intercept course. How this chart shapes up this week may well prove to be the best clue about the broad market's near-term direction.

Side note: The Dow's volatility index (VXD) is looking a lot like the NASDAQ's, and NOT a lot like the S&P 500's. Between both shapes, we have to think the NASDAQ's and the Dow's volatility indices are the more meaningful of the three. Fear hasn't swelled up to any big degree yet, which means we've probably not seen the worst yet.

If the volatility indices don't spike - and instead just drift higher as they appear to be doing now - that will actually help the bears in the bigger picture. The telltale sign of a bigger bearish downtrend will be of the VXN and VXD start to persistently press upward into a rising upper Bollinger band.

DJIA Daily Chart
 

Price Headley is the founder and chief analyst of BigTrends.com.