Coming Week: Data Barrage

The calendar may be changing, but Wall Street's worry list remains the same after a blowout year for stocks.

"The big question for next week will be if people get down to business or wait to see if we get any follow-through from the year-end rally," says Paul Mendelsohn, chief investment officer with Windham Financial. "This past year, the second half of the year we've been living from data point to data point, and that could become potentially more critical in 2007."

While 2006 represented a big improvement from the previous year for the major indices, some expect the upside extremes to balance out in January. The S&P 500 ended the year with a gain of 13.6%. The Dow Jones Industrial Average surged 16.3%, and the Nasdaq Composite jumped 9.5%.

"We're finishing the year in an extremely overbought condition, so January could become volatile depending on what some of our data points look like," says Mendelsohn. "The pushes that have taken place in stocks during December have been mind-boggling."

Last week, it was Santa, not the Grinch, who controlled the market. The Dow surged 120 points, or 1%, during the holiday-shortened week. The S&P 500 was higher by 7 points, or 0.5%, and the Nasdaq counted a gain of 14 points, or 0.6%, over the four sessions.

Stocks will be closed Monday for the New Year's holiday and Tuesday for the funeral of former President Gerald Ford. When trading resumes Wednesday, traders hope that the economic data help snowball the Santa Claus rally into something larger.

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