Minutes of the Federal Reserve's most recent meeting of its policy-setting committee will be published on Wednesday, the second trading day of a holiday-shortened week in the United States. The U.S. stock market will be closed on Monday for Presidents Day.
Investor interest in the January 28-29 meeting's minutes will probably focus on discussions surrounding the Fed's forward guidance. The U.S. central bank's threshold that the U.S. unemployment rate must hit 6.5 percent before Fed policymakers will consider an increase in interest rates seems stale now. The jobless rate is just a notch higher at 6.6 percent.
The Fed doesn't expect to start raising rates until at least late next year. So Wall Street will focus intently on the Fed's maneuvering over how to adjust this guidance, which is supportive of higher equity prices.
"We want to see any discussion on the language moving away from the thresholds," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey. "It's clear the thresholds are boxing them in."
"The market wants to hear they are flexible regarding data that perhaps continues to soften," she said. "Any sense of what it would take for them to pause the tapering will be important."
Fed Chair Janet Yellen said in her first congressional testimony earlier this week that "unseasonably cold temperatures ... may be affecting economic activity in the job market and elsewhere," giving traders a reason to dismiss a recent soft patch of economic data.
The Fed announced in December that it would begin to shrink the amount it spends monthly on asset purchases in its stimulus program to support the economy. The beginning of the end of the stimulus shifted market focus to fundamentals and economic data.
Traditionally market-moving numbers next week include U.S. housing starts on Wednesday and existing home sales on Friday, as well as producer and consumer price inflation on Wednesday and Thursday, respectively.
However if the recent pattern continues, any weakness in the numbers will be disregarded, blamed on excessive cold weather, and the market will move on.
"The market is getting used to the bad weather, factoring it in," said John Canally, investment strategist and economist for LPL Financial in Boston. "But the story is, it might get to April, when we get the March data, that we have a return to what the underlying strength of the economy looks like, and then that might be overstated."
PULL OUT YOUR CHARTS
In the coming week, technical analysis could fill the vacuum left by the uncertainty about how economic numbers reflect the underlying strength of the U.S. economy.
The S&P 500 traded on Tuesday above its 50-day moving average for the first time since January 24. That level, now near 1,811, served as support on a first test shortly after the open on Thursday.
That curve is again trending higher. Next week, the S&P 500's trading range could tighten as it approaches the 1,850 area, near the intraday and closing record highs set in mid-January.
"The 1,850 area is very important. It's safe to say there will be a good amount of sell interest up there," said Frank Cappelleri, equity sales trader and market technician at Instinet in New York.
He added, however, that "you could make the argument that there were a lot of people ready to sell near the 50-day moving average a few days ago, and the market just blew past it."
The market's momentum is on the upside, coming off the best two-week performance of the year. Unless stocks trade relatively flat for the week, support or resistance will have to give.
For the week, the Dow Jones industrial average and S&P 500 each rose 2.3 percent, and the Nasdaq Composite climbed 2.9 percent. By Friday's close, the three major U.S. stock indexes had scored their biggest weekly percentage gains of 2014 - and their first back-to-back weekly gains this year.
"Positive momentum came back into the picture, and people who missed the upturn put some money to work," Cappelleri said. "Indicators that were depressed have turned around, neutralized and are now back to overbought."
In the search for more catalysts to influence the stock market's direction next week, traders will have a few earnings to latch on to, with Coca-Cola Co and Wal-Mart Stores, Inc as the headliners.
Coca-Cola, the world's largest soft drink company, will report fourth-quarter earnings on Tuesday before the U.S. stock market opens.
Wal-Mart is expected to post fourth-quarter results on Thursday, and more importantly, the world's largest retailer will give its 2014 earnings forecast.
With 398 S&P 500 companies having reported results so far, 66.3 percent have beaten earnings expectations, above the historical average of 63 percent. More than 64 percent have topped revenue forecasts, above the long-term average of 61 percent, both according to Thomson Reuters data.