Nevertheless, when all was said and done, the market took the weak economic reports with a grain of salt; attributing much of the weakness to the weather. And while I do believe people don't shop for cars and homes in snow drifts and 30 degree below zero temperatures, the weakness cannot be all attributed to the weather. As an example, the January Housing Starts report on Tuesday was dismal with new housing starts down 26% but housing permits in the west were down a whopping 23%. Zerohedge quipped, "that's where the snow must have been the strongest".
The market is obviously coming down on the side of the multitude of economists who are saying that the recent spate of data is an anomaly and that we will start to see a strong recovery coming into mid year.
I'm ambivalent as to the direction of the economy so I'll take my cues from the markets. It's pretty clear that stocks still want to go higher despite all the volatility but there is just no catalyst to push them to new all time highs. Small caps had an impressive week gaining 1.34%. Here's a daily chart of the Russell 2000:
The mid caps had a good week as well:
And, of course, the S&P 500 is also hovering near it's all time highs: