At the start of each week, VFC's Stock House examines some news items, stocks and stories that made headlines during the previous week, and may also be positioned make headlines or influence trends during the upcoming week as well.

Investors liked what they saw last week from the major jobs reports, even though the overall unemployment number ticked modestly higher, and stocks surged yet again, allowing the DOW to breach - and then hold - the 14,000 mark. Other economic data released during the week and a 'status quo' approach by the Fed urged investors to shrug off a fourth quarter GDP pullback and continue the buying that allowed the January rally of 2013 to continue. This week, though, a pivot point should be met where investors decide whether to keep charging with the buying momentum or start banking some profits, given the sharp rise in stocks since the fiscal cliff deal was announced at the dawn of the new year. There's little doubt that the US economy has undertaken a solid recovery over the past couple of years, but the debate will rage as to whether or not the economy is on sound enough footing to justify the setting of new market highs.

On first glance, there's the argument that the markets are forward looking, and although the economy may not be at a point right now that justifies new record highs in the stock markets, that point may come in the not-so-distant future. Additionally, given the transparency seen today in the strength of the recovery, when compared to the false bubble of nearly five years ago, investors are apt to be more comfortable with continued buying now than they were at any other point in the last half decade...




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