Donald Trump undoubtedly dominated last week’s news flow once again, as the new President continued to push his plans relentlessly with the use of some controversial executive orders. While some of the orders sparked protests throughout the country, the major indices barely budged and remained close to their respective all-time highs. The Dow ended the week back above the historic 20,000 level after the choppy period, as the “dovish” Fed statement improved investor sentiment on Wall Street. The quarterly earnings reports kept on coming in, and the record numbers posted by Apple (AAPL), the most valuable company out there, also helped the late-week rally, especially in the case of the Nasdaq.

The economy continues to send mixed, but generally encouraging signals that are supportive of the Federal Reserve’s rate hike plans for 2017. All eyes were on the non-farm payrolls number last week, as usual, but the weak average hourly earnings reading stole the show on job’s Friday. The slowdown in wage growth might give more time for the Fed to “normalize” its benchmark rate, as inflation will probably stay well within the Central Bank’s “comfort zone.” The ISM manufacturing and services PMIs remained well north of the 50 threshold, while the CB Consumer Confidence Index dipped slightly from its recent 8-year high amid the political uncertainty.

Technicals continued to show a positive picture, as all of the most-watched indicators remain ”as-bullish-as-they-get.” The major indices dipped below their 50-day moving averages in the first half of the week, but the Nasdaq, the S&P 500, and the Dow all climbed back above the short-term average later on. The Nasdaq finished the week just a hair below its all-time high, as the benchmark is still the undoubted leader of the current rally. Small caps performed in line with the broader market for the second week in a row, although the Russell 2000 closed the period on a clearly positive note once again. The Volatility Index (VIX) popped higher at the start of the week, just to hit a new 11-year low after the Fed statement, before closing right at the 11 level on Friday.

Market internals stayed strong amid the brief correction, as they were helped by the much-needed stability in small caps. The weak correction caused a bit of deterioration in some of the key measures, but the Advance/Decline line climbed higher again, as advancing issues outnumbered declining stocks by a 2-to-1 ratio on the NYSE and by a 3-to-1 ratio on the Nasdaq. The average number of new 52-week highs declined sharply on both exchanges, falling to 106 on the NYSE, and 102 on the Nasdaq. The number of new lows rose slightly in the meantime, to 18 on the NYSE, and 35 on the Nasdaq. The ratio of stocks above their 200-day moving average remained surprisingly high despite the flat week, as it hit 70% near the end of the period thanks to the broad bounce.

Short interest continued to decline following the Fed meeting, as bears were discouraged by Yellen & Co.’s cautious outlook. The list of the most shorted stocks on the NYSE and the Nasdaq saw some interesting changes again in the quiet environment. The short interest in railroad equipment manufacturer Greenbrier (GBX) continued to rise steadily, to 37%, even as the stock doubled last year, and climbed further in January. Fitbit (FIT) remains in the crosshairs of short sellers as well, as short interest in the company jumped by 25% recently, to 42%. Scripps Network (SNI) is now near the top of the list of the stocks with the highest day-to-cover ratios (DTC), with a reading of 11, as the stock keeps on creeping to new highs this year. Teradata (TDC) might also cause sleepless nights for bears, as the stock is getting close to its all-time highs, while the DTC ratio hit 12 last week.

The economic calendar will be virtually empty following the busy week, with only the UOM Consumer Sentiment Index coming out on Friday. As all the major central banks held their monetary meetings recently, stocks will be trading without the influence of any major releases. Seasoned traders agree that these periods are usually great to assess the underlying strength of the market. The Gorilla thinks that the recent price action has to be a good sign for bulls, even in the face of the political turmoil, as international worries regarding the “Brexit” and the slowdown in China also eased somewhat. With that in mind, stay tuned for a crucial week on Wall Street!