For the week, the Dow added 48.74 points to finish at 313.13, while the Nasdaq dropped 14.24 points to close at 1247.88. The S&P gained 11.40 points to end at 864.24. Volume was on the heavy side, especially for this time of year. Equities finished mixed this week, after a large rally on Monday turned out to have little in the way of staying power. Monday's move was quite similar to the big moves seen the previous Wednesday, where the gains were quite broad-based in nature and seemed to stem largely from a great deal of short covering. Aside from what appeared to be an artificial bounce because of window dressing, the remainder of the week's trading action was quite negative overall. Part of the catalyst for the weakness was a series of economic reports which suggested that the US economy is not as rosy as many of the pundits thought it was just one short week ago. Most notably, there was further evidence that the consumer may in fact be pulling back, not to mention evidence that the manufacturing sector may once again be contracting. Clearly, these developments were bad news for a market which is still quite pricey relative to earnings and the result was further selling of stocks across the board. It should be noted that tech shares took the brunt of the selling after companies such as National Semiconductor, Adobe and KLA-Tencor issued bearish guidance moving forward. Despite market pundits trying to downplay the significance of the recent poor economic data (they suggested it is already priced into stocks), if the economy is about head back into recession, the downside risk for the major averages is quite significant. After all, a weaker economy would hurt the already weak bottom-lines of corporate America. This in turn would make an already expensive stock market more expensive. Let's keep in mind also, the stock market is still dealing with the after-effects of a bursted speculative market bubble, not to mention a growing lack of confidence on the part of investors. Moreover, the personal savings rate went negative a several years back (meaning consumers are basically in debt), however the consumer still seems to be spending. With this current situation, it's very difficult for the economy to begin a new expansion with such a poor foundation to work from. This is very similar to the stock market where P/E ratios are already so far above historical norms that if a new bull market were to begin, one would have to wonder how much higher stocks could go and/or just how long it could last. In summary, the US economy will have to enter a period of stagnation or recession in order to work off its excesses from the 1990's. This will likely mean that further upside for the major averages will be limited for some time to come, while downside risks remain relatively large moving forward.