The market broke out to the upside, as I predicted it would -- although the breakout came a good bit sooner than I anticipated. My expectation was that stocks would remain within their long-standing trading range until a clear upside catalyst emerged, such as improving Q2 earnings reports and forward guidance. But investors aren’t waiting around. Clearly, they are positioning in advance of the emergence of such catalysts. For now, fear of missing liftoff is stronger than fear of getting caught in a selloff.

In a year in which stock prices mostly have been driven by news rather than fundamentals, three things stood out last week. First, terrorism has taken on an unsettling new face -- the stay-at-home mom down the street or your long-time co-worker at the plant -- as the dark side of the exponential growth in social media rears its ugly head (with something much more sinister than porn sites or online bullying). Second, with the strong jobs report on Friday, the Federal Reserve seems to have all their ducks in a row to justify the first fed funds rate hike in nine years.

Some weeks when I write this article there is little new to talk about from the prior week. It’s always the Fed, global QE, China growth, election chatter, oil prices, etc. And then there are times like this in which there is so much happening that I don’t know where to start. Of course, the biggest market-moving news came the weekend before last when Paris was put face-to-face with the depths of human depravity and savagery. And yet the stock market responded with its best week of the year.

November got off to a strong start early last week, and the rally broadened to include financial and retail stocks. But after a torrid six weeks of bullish behavior while ignoring (or perhaps reveling in) concerns about the global economy during, U.S. stocks encountered some strong technical resistance in the middle of last week, and it has continued into Monday. The Dow Jones Transportation Index continues to a drag on the overall market, and this segment will need to gather some enthusiasm if the broader indexes are to resume their advance.

Last week, the S&P 500 put up its best week of the year, closing above key psychological levels and breaking through bearish technical resistance, with bulls largely inspired by the dovish FOMC meeting minutes. But this year’s market has been news-driven and quite difficult for traders to read. Even our fundamentals-based and quality-oriented quant models have struggled to perform.

The Fed’s decision to not raise the fed funds rate at this time was ultimately taken by the market as a no-confidence vote on our economic health, which just added to the fear and uncertainty that was already present. Rather than cheering the decision, market participants took the initial euphoric rally as a selling opportunity, and the proverbial wall of worry grew a bit higher.

For those investors who thought there might be a quick V-bottom recovery in the markets like we saw last October, they have been sorely disappointed. Last week, the Dow Industrials fell -3.2%, the S&P 500 large caps fell -3.4%, the Nasdaq was down -3.0%, and the Russell 2000 small caps dropped -2.3%.From a technical standpoint, most chartists agree that much damage has been done to the charts and the market seems quite vulnerable and likely to retest lows. Market breadth is poor. And from a fundamental standpoint, the list of concerns is long.

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