Investors continue to bet on growth despite the rising specter of inflation. The S&P 500 reversed early losses on Wednesday to close with a small gain going into the holiday weekend. The move is the 15th day of trading within a near-term consolidation range that is fast becoming a bullish-looking flag pattern. If the market breaks out to the upside and confirms this pattern within the next week or so it should rally well into the end of the year.

In economic news, the PCE Price Index was released on Wednesday coming in largely as expected. The rub is that ?as expected? included a 0.20% month-to-month increase and the fastest pace of YOY gains for several decades. At this pace, the market should expect the first interest rate hikes to come well before the middle of next year.

The S&P 500 regained its footing on Wednesday after a quick pull back in prices. The move is due in part to weaker than expected PMI numbers that suggest economic activity slowed in the month of November. Although Tuesday's action was bullish, the markets could continue to fall on Wednesday simply because of a lack of trading volume. The markets are closed on Thursday for the Thanksgiving holiday and will not resume normal trading until Friday.

Today's market action will be driven by a raft of economic data including the GDP revision and Personal Income and Spending data. The PCE Price index, the Fed?s favored tool for measuring consumer-level inflation will be the release of the week. It is expected to accelerate on a month-over-month basis and rise 4.1% versus last year. A hotter than expected number would be bad for the market.

Equities got a boost from good news on Monday that sent the S&P 500 up to a new all-time high. The news? President Biden nominated Jerome Powell for another term as head of the Federal Open Market Committee. As head of the committee, he will be tasked with monitoring the U.S. monetary policy and keeping tabs on inflation.

With inflation running hotter than expected, it is expected the FOMC will be raising rates next year, the question is by how much? The CME?s Fedwatch Tool, an indication of market sentiment regarding interest rate hikes, has seen the average expectation creep higher in recent weeks with most participants expecting at least one hike by June and many believing the first will come much sooner than the June meeting.

Equities were mixed to end the last week but left the NASDAQ Composite and S&P 500 trading at new all-time highs. The move was driven by better than expected economic data as well as the passage of President Biden?s infrastructure package. The package, if nothing else, promises to unleash trillions in spending over the next few years and that is stimulus enough for the stock market.

Earnings from the retail sector are also to blame for last week?s performance. The sector reported largely better than expected numbers but gave a mixed view of the holiday season. While inventories should remain robust through the end of the year there are some concerns products arriving from Asia will be in short supply come January.

Equities were able to hold their ground again on Thursday marking the 10th consecutive trading day at current price levels. If the index can maintain this level into the close of action today it could lead to a big rally next week. The technical outlook for the S&P 500 suggests another 400 points worth of rally is still ahead or 8.5%. Needless to say, that would make another all-time high in 2021 but there is a risk.

With the Thanksgiving Holiday upon us holiday trading conditions are ruling the market. This means lighter than average volumes and the possibility of increased volume. Next week the market will have a raft of economic data to process. The first read on Q3 GDP is due out on Wednesday and includes several key pieces of economic data.

The markets gave up some of their gains on Wednesday but investors shouldn?t worry too much about the move. Bad news for Visa is cause for most of the day?s decline and was offset by another round of much better than expected news from the retail sector. Retailers from Target to TJ Maxx beat their consensus estimates and guided the market higher citing robust trends and the expectation for fully-stocked shelves this holiday season.

On the economic front, the housing data was a mixed bag with Building Permits rising more than expected and Housing Starts falling versus an expectation for gains. The data underscore a worsening problem in the housing market, that of rising demand and stalling activity due to supply and labor shortages. If the bottlenecks are corrected soon housing prices could sustain their meteoric climb.

The S&P 500 moved up to set a new all-time closing high on Tuesday after several better than expected economic reports were released. Topping the list is retail sales which advanced 1.7% at the headline and core levels, both 0.2% above consensus. Elsewhere in the economy, business inventories rose more than expected as did the NAHB Homebuilder?s index which both suggest supply chain disruptions are easing.

The caveat is that, with the retail sales figures at least, all of the gains are due to inflation. With retail sales rising 1.7% and inflation up 6.2% economic activity is not expanding. Today traders will be on alert for reads on Building Permits and Housing Starts as well as an earnings report from major retailer Target.

Equities were mostly flat on Monday with traders on alert for this week?s round of economic data. Top of the list is the Retail Sales figure due out today but there are several reports of interest. Retail sales are expected to accelerate to 1.5% from last month?s 0.7% but still trail the 6.2% increase in consumer prices as indicated by the CPI data.

Later this week, traders will be on the watch for reads on housing starts and building permits as well as the Index of Leading Indicators. All three data points are expected to accelerate from the previous month as well and could move the market. The risk for traders is that supply chain hurdles and lack of materials could cut into economic activity. If so, the outlook for earnings in the 4th quarter could begin to deteriorate.

Equities finished the week strong last week but still down from the all-time set the week before. This week, if the economic data fails to impress, the decline could deepen. The key report of the week will be the retail sales figures on Tuesday but there are several reports that could move the market. Retail sales grew in the previous month but were offset by a much larger than expected increase in inflation and that is expected to be true this month.

The question investors need to have answered is how big of an impact are higher prices having on retail sales and what does it mean for America?s consumer economy. If prices continue to rise unchecked the next recession could be just around the corner.

Equities rebounded on Thursday but the move was small and traders are cautioned not to read too much into the move. Price action remains bearish in the wake of the October CPI report and suggests a deeper decline is in store for the market. The broad market S&P 500 is already down a full percent from the recently set all-time high and could easily fall another 2.0% before hitting the first significant target for support.

That target is at the short-term moving average, near 4,565, but there is no guarantee the market will halt its decline there. With inflation accelerating to new highs and no end in sight for the trend the market could correct a full 10% to 20%. Today?s action will be telling. If the market moves lower and ends the week at the low of the period next week?s action could bring even more selling.