The buy-the-dip momentum has been running strong ever since the S&P 500 tested its 200-day moving average last Friday. Since then, the S&P 500 has surged 198 points or 7.8%.
Taking into account the positive close last Friday, the S&P 500 has strung together five consecutive winning sessions (aka the "Fab Five").
It is aiming for a six-pack today, and the early indication is that the S&P 500 will start the session on a flattish note.
The S&P 500 futures are down two points points and are trading close to fair value. The Nasdaq 100 futures are down 13 points and the Dow Jones Industrial Average futures are down 19 points.
There isn't a lot of buying thrust at the moment, as market participants appear to be cooling their jets a bit on the notion that the stock market could be subjected to some profit-taking interest in front of a three-day weekend (the market will be closed Monday in observance of Presidents' Day).
At the same time, the nagging sense that this recovery rally has been a little too easy, and hasn't been tested yet, is perhaps also working to constrain some of the buying enthusiasm at this juncture.
Coca-Cola (KO) and Deere & Co. (DE) did their part to contribute to the bullish earnings narrative that has helped the stock market recalibrate after last week's technically-driven selling. Each company topped analysts' average expectation for the December quarter and provided reassuring guidance.
Similarly, the reflation theme got some backing from this morning's economic data.
Housing Starts increased 9.7% month-over-month in January to a seasonally adjusted annual rate of 1.326 million (Briefing.com consensus 1.240 million) while building permits jumped 7.4% to a seasonally adjusted annual rate of 1.396 million (Briefing.com consensus 1.300 million).
The increase in permits was driven entirely by permits for multi-unit dwellings. Single-family permits declined 1.7% to 866,000. Starts, however, were helped by a 3.7% increase in single-family units, which totaled 877,000. The Northeast saw the biggest jump in single-family starts (+34.7%), followed by the South (+4.5%). Single-family starts fell 4.0% in the Midwest and 0.4% in the West.
The key takeaway from the report is that it points to more supply coming to a housing market that is in desperate need of single-family supply. At the same time, this report provides a positive input for Q1 GDP as the number of units under construction in January (1.120 million) was 1.5% above the fourth quarter average.
Separately, the Import and Export Price Indexes for January both showed rising prices.
Import prices increased 1.0% -- the largest since May 2016. Excluding fuel, import prices rose 0.4%, which was the largest monthly advance since March 2012. Export prices increased 0.8%. Excluding agricultural export prices, which dipped 0.1%, export prices were up 0.9%.
On a year-over-year basis, nonfuel import prices were up 1.9%, versus up 0.2% for the 12 months ending January 2017. Nonagricultural export prices, meanwhile, were up 3.7% year-over-year, versus 2.4% for the 12 months ending January 2017.
The key takeaway from the report is that it will continue to feed into the market's budding inflation expectations.