The leading central bankers of the world caused a typical green-bar-red-bar madness in stock markets last week, as the European Central Bank, especially, delivered confusing messages at the monetary summit in Portugal. The Euro experienced a huge rally, as investors deciphered the speeches of Mario Draghi and his colleagues as a step towards monetary tightening, despite the fact that they tried to downplay that speculation. Thursday’s session was scary for bulls as the Nasdaq led an almost 2% decline in the major benchmarks, testing its “Flash-Crash” lows from two weeks earlier. Tech stocks bounced off the lows once again, and the market settled down and finished on a positive note on Friday.

Economic numbers were mixed once again, but the weakness in the more forward-looking indicators is still pointing to troubles ahead in the coming quarters. Core durable orders posted another sizeable miss, while the CB Consumer Confidence Index and the final GDP print came in above consensus estimates. The brief optimism regarding the housing market faded away quickly, as pending home sales declined by almost 1% on a monthly basis (analysts were expecting a rise of similar magnitude). The Chicago PMI was the brightest spot, surging to a new 3-year high and beating expectations by a longshot. Long-term Treasuries took a hit despite the mixed releases, but that was likely the result of the perceived shift in central banks’ future policies rather than a positive turn in economic expectations.

Technicals are still mostly bullish, despite the volatile moves last week, although the Nasdaq quickly became the biggest question mark, just a few weeks after being the leader of the rally. The tech benchmark closed the period right at its 50-day moving average, while remaining well above its 200-day indicator. The Dow and the S&P 500 are still north of both their long- and short-term measures, although the short-term averages are closing in on both indices. The Russell 2000 is also above both averages, and it had a relatively bullish day, especially given the previous week’s negative performance. The Volatility Index (VIX) had a crazy day on Thursday, understandably, as it shot up to 15, before falling back to its previous range and closing the week near 11 once again, as the market quickly calmed down.

Market internals continue to give mixed readings, with some pointing to weakness under the hood, while others still showing signs of a healthy uptrend. The Advance/Decline line is in the latter category, as it continued its march to new highs last week, while advancing issues outnumbered declining stocks, by a 2-to-1 ratio on the NYSE and by a 3-to-2 ratio on the Nasdaq. The average number of new 52-week highs took a slight hit on both exchanges amid the volatile correction, falling to 89 on the NYSE, and 91 on the Nasdaq. The number of new lows fell encouragingly in the meantime, dropping to 17 on the NYSE, and 30 on the Nasdaq. The ratio of stocks above their 200-day moving average is still low, although the relative strength in small caps meant that the measure ticked higher during the week, and finished at 64.5%.

Short interest took off from its historic lows last week, as the tech sector showed signs of increased bearish activity, while the energy segment got a lift from the rebound in the price of oil. GoPro (GPRO) moved from its highly depressed price levels and surged by almost 15%, before retracing some of the gains, while the 50% short interest points to a possibly developing short squeeze. RH (RH) made our list once again, as the furniture company jumped another 10%, while short interest in the company still only fell to 42%. Western Union (WU) is creeping higher on the list with the highest days-to-cover (DTC) ratio, now sporting a ratio of 13, while the stock continues to hover around the $19 level, possibly getting ready for a move. TransDigm (TDG) is in a similar position, with a DTC ratio of 12 and narrow short-term price range that could be the “base” for a strong rally.

The Gorilla has mixed feelings about the coming week, as the relative weakness in the Nasdaq is usually a negative sign, and the tech benchmark is just above a crucial technical “support” level. That said, small caps held up well in the volatile environment, which could mean that market internals are already improving. Jobs Friday will likely steal the show again this week, although the ISM manufacturing index also comes out on Monday, the services index will be released on Thursday, while the FOMC meeting minutes are scheduled for release on Wednesday. This weekend the G20 leaders will gather in Hamburg after last week’s central bank meeting, and that could be another game changer. Participants will likely react to the domestic and international plans of President Trump, with some analysts fearing an outright global trade war. Stay tuned for another busy week!