U.S. Stocks moved up about 1% last week, amid conflicting and uncertain signals from European officials on the Continent’s sovereign-debt problems. In traders’ parlance, this looks like a market that wants to go up, with investors choosing to focus on the good news.

Thursday was the week’s only down day, with stocks falling on comments from European Central Bank President Mario Draghi, who poured cold water on investor hopes that the ECB might start to buy a lot of bonds. There’s a sense among investors that the ECB head might be bluffing until there is clearer action from the European Union. Well, that’s going to be a bit of a wait.

Still, the central bank cut interest rates and announced some three-year loan programs to banks that should improve their liquidity issues. That doesn’t do much for their solvency problems. Again, the market took what it could from that.

And the EU agreed Friday to draft a new treaty for deeper economic integration that envisions a tougher budget discipline regime with automatic sanctions for deficits. That’s right, it’s an agreement to eventually draw up a treaty that will take many months to finalize and still needs approval from the various countries that will take part.
ANY OF THOSE countries could eventually reject the final plan. It’s tentative and no enforcement rules were announced and no new policies aimed at improving growth came out. Oh, and the U.K. isn’t taking part. The market still took what it could from all that anyway.

The Dow Jones Industrial Average rose 1.4% to close at 12184.26. The S&P 500 index was up a bit under 1% to 1255.19 while the Nasdaq Composite added 0.8% to 2646.85. Trading volume wasn’t particularly heavy.

The market has been assuaged, despite the slow, steady and sometimes prodigal moves by policymakers, says Quincy Krosby, market strategist at Prudential Financial. “But that’s how policymaking works….They [the EU] bought some time.”
Krosby likes Draghi’s moves even if they don’t make traders’ Christmas wish list. Couple that, she adds, with the central banks’ indications last month that they are ready to step in with liquidity, and it lends confidence to markets. “It remains a traders’ market and one that can turn on you quickly.”

At least the U.S. news was unambiguously positive. Friday, the Michigan consumer sentiment index rose to 67.7 from 64.1, above the consensus forecast. It’s the highest reading since June though still weak by historical standards. And jobless claims fell to 381,000 from 404,000, below the consensus.

Another ignored signal that isn’t particularly bullish was the market’s failure Friday to close above its 200-day moving average.

We’re guessing that investors are looking with great anticipation to the next big euro zone meeting. On Jan. 23, there will be a regularly scheduled gathering of the group’s finance ministers. To quote a famous line from the New York Jets linebacker Bart Scott: “Can’t Wait!” (Source: Barrons Online).