Hey guys and gals, just as a reminder (if you're looking to gamble a bit), Theravance (THRX) will hear from the Food and Drug Administration's advisory panel on Wednesday about its COPD drug Breo. As I mentioned in Friday's newsletter, this is NOT a final FDA yes/no decision, but rather, a recommendation to the FDA about how the panel thinks the agency should vote on the drug. Funny thing though... the stock's already popped on what the market believes will be encouraging news tomorrow. Bryan Murphy laid it all out - in detail - today, so if you were thinking about tossing that coin, you should check out what he's got to say. The catch: It's not clear what time any announcement will be made. It's possible the good news could come out before trading begins, and not even give you an opportunity to slip into a position before any good news becomes Anyway, that's not what I wanted to talk to you about today - clearly the market's the hotter topic right now. Before we even get to that though, we need to work through today's key economic numbers. Economic Numbers Look (Mostly) Good Today's undoubtedly the busiest day of the week in terms of economic data. In fact, today's the only day we care about on the economic front, as we got a bunch of major numbers all in rapid-fire succession. This data includes inflation, housing starts, and industrial activity. In that order... The good news is, there's no real inflation. The bad news is, there's no meaningful inflation when there should probably at least be some. Prices fell 0.2% last month when you include food and energy (oil/gasoline) costs. Taking food and energy spending out of the equation, consumer prices rose only 0.1% in March. That translates into an annualized inflation rate of about 1.5%, versus 2.0% as of February. What's wrong with low inflation? The theory is - and I agree with it - were the economy truly healthy it should be able to sustain an inflation rate of about 3.0%. The fact that it can't (especially in this hyper-simulative environment) is something of a red flag. And on a side note, the lack if inflation since around this time last year is one of the reasons gold prices have been crushed of late. Those gold fans largely bought gold to defend against inflation that never happened, and it doesn't appear like it's ever going to happen either. Why hang on to an asset that is slowly losing ground? Housing starts rolled in WAAAAY better than the expected annual pace of 935,000 units. The Census Bureau said the pace of new starts reached 1.036 million last month. That's the best pace since June of 2008, when the number was on the way down. Though issued permits only came in at an annual rate 902,000 (down from February's 939,000), it's still a pretty strong number. We've been saying for months the housing market is defying the naysayers, and there's nothing about today's numbers conflicting with that idea. There is one BIG side-note though - all the year-over-year growth is stemming from the construction of multi-family housing units like condos and apartments. All told, 392,000 of last month's new-starts pace were starts of multi-family housing. Rental demand is still sky high, and that's something you may want to consider if you're looking for an income-oriented position. We still say a construction slowdown is in the cards, but even slower growth is still growth. The market will almost certainly freak out if the pace does taper off, but that steep dip will be a long-term buying opportunity. The final piece of economic news we care about today is the Federal Reserve's report of March's industrial production and how much of the nation's manufacturing capacity we're using. Productivity grew 0.4% last month, and we're now using 78.5% of our capacity, up from February's reading of 78.4%. If you're thinking those are very modest improvement, you're right. By economic standards, however, those are some significant increases. We know most investors don't really care much about those two numbers, but they're actually a couple of best tools we've seen for making long-term buy/sell decisions. In short, they're telling us the bigger-picture bull market is still intact, and justified. Their bullishness WON'T stave off short-term corrections though. Just keep in mind that defining your timeframe (and sticking to it) is half your battle. Stocks Up? So What? As much as I'd like to dazzle you with some brilliant, pithy take on where the market's headed next, my brilliant comment is simply going to be this: Wait! The market was up firmly today, but after Monday's 2.2% pounding, a bounce today was a foregone conclusion. Stocks are still trying to find their bearings here, and I'm just not ready to say the uptrend is underway again. The good news is, the S&P 500 closed back above that key 1570 mark on Tuesday. Johnson & Johnson (JNJ) as well as Coca-Cola (KO) also posted strong first-quarter earnings today. On the other hand, Target (TGT) told us to lower our expectations for its first quarter results, and oil prices dropped following news that demand was tapering. The volume behind today's rally was also weaker than yesterday's. The point is, traders can see whatever they want to see in stocks right now, and the dust from yesterday's plunge hasn't even settled yet. My game plan from here is to look for a higher close, but at the end of the week. Said another way, I don't really care what happens between here and Thursday. For me to be bullish, I want to see a close on Friday anywhere above today's close of 1574.57. That gives the dust two more days to settle, and will also show the market's true conviction at a more critical time (heading into the weekend). If instead the S&P 500 ends the week under 1570, that'll pretty much confirm my suspicion that the summertime downtrend has already started. You guys know how this works though... in the current environment, everything is on a day-to-day basis. That's why we recommend checking in tomorrow. Now, where my analysis is a conditional one, the market outlook the guys over at the SmallCap Network Elite Opportunity are working with right now is a little more decided. I can't wait to see where they go with things after today's newsletter, with which they opened my eyes to something I hadn't really seen or thought about the market's long-term (since 2009) rally. I know you're getting tired of me saying it, but I firmly believe everyone should take a look at what the SCN EO has to offer. You can still get the free two-week trial too, so it's a totally risk-free look. Learn more about it here. 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