Wall Street had a mixed week after the recent march to all-time highs, as stocks turned slightly lower in the next round of the inner battle in the Republican Party before upbeat earnings reports saved the day. While not everything is rosy regarding 3rd quarter numbers, the most watched companies reported better-than-expected numbers, with the likes of Amazon (AMZN), Alphabet (GOOG), and Microsoft (MSFT) all blowing away the consensus estimates. The Nasdaq, which has been lagging the other major indices lately, was lifted by the tech-behemoths’ performance, closing the week at a new record high. Among the negative surprises, AT&T (T), Chevron (CVX), and Boeing (BA) were the most prominent names.

Economic numbers were overwhelmingly positive as well, with only pending home sales disappointing the market. The key durable goods report and the widely-watched advance GDP print both provided bullish surprises. And, the blowout new home sales release gave some hope in the sea of negative housing data. The most important event of the week was arguably the European Central Bank’s tapering announcement, which turned out to be a very dovish tightening plan. Global equities gained ground after the decision, but as the dollar surged, domestic stocks suffered somewhat, while Treasury yields continued to climb higher.

As the Nasdaq recovered from its early-week dip, the technical picture remained positive across the board, with all of the major benchmarks still trending higher. The Dow, the S&P 500, and the Nasdaq are each trading above their 50- and 200-day moving averages, and the previously lagging tech index jumped ahead of the pack, posting a sizable new record high on Friday. The Russell 2000 is still under mild selling pressure ever since the tax-plan surge, and it drifted lower throughout the week, despite the bounce in the broader market. The Volatility Index (VIX) moved higher off its near-record low and spiked as high as 13 amid the pullback, although it finished just above the 10 level again, as stocks moved higher.

Market internals deteriorated for the second week in a row, which could mean that a correction is in the works, even as Friday’s rally made bulls smile. All of the most reliable measures showed some weakness, with the Advance/Decline line edging lower throughout the week. This occurred even though advancing issues outnumbered declining stocks by a 3-to-2 ratio on the NYSE and by a 4-to-3 ratio on the Nasdaq. The average number of new 52-week highs declined again on both exchanges, falling to 152 on the NYSE, and 122 on the Nasdaq. The number of new lows jumped higher, climbing to 73 on the NYSE, and 57 on the Nasdaq. The ratio of stocks above their 200-day moving average took a nosedive amid the small-cap weakness, and closed the week near the 63% level; well below the previous reading of 68%.

Short interest crept higher as volatility increased, but it remains at historically low levels. That said, the most shorted names failed to impress in the rising yield environment that means tightening credit conditions. Shake Shack (SHAK) was among the bright spots yet again, despite the short interest of 56%, as the shares of the company rose another 6%. RPC (RES) experienced volatility around its earnings release, but the healthy late-week bounce and the short interest of 48% suggest underlying strength. Medical appliance maker, and current GorillaPick, ResMed (RMD), scared shorts with a more than 10% jump on Friday, and given its days-to-cover (DTC) ratio of 14, more pain is likely ahead for bears. Becton, Dickinson, and Co. (BDX) is in a promising technical “consolidation” pattern, and its DTC ratio of 12 suggests that there is more left in the tank.

The ongoing rally will face a huge test this week, with several crucial economic releases coming out, and with another Fed meeting scheduled for Wednesday. Although no interest rate hike is expected this time around, the committee’s reaction to the ECB’s move will be of interest, and the next Fed Chair could be revealed around the time of the meeting as well. Before that, the CB Consumer Confidence Index will come out on Tuesday and the ISM manufacturing PMI on Wednesday. Friday will be the busiest day yet again, with the government jobs report, and the non-manufacturing PMI both having the potential to move the market. As the crucial tax reform still seems to be on track, the Gorilla thinks that even if a correction develops, the long-term trend is not in danger. Stay tuned for an eventful week!