Coming Week: Walking the Line

The coming week finds the bulls chastened by last week's dip and facing a slew of data that could swing sentiment further into despair -- or back toward euphoria. Which way the market's mood swings could come down to the state of the all-important consumer, to be revealed in both confidence numbers and earnings reports from several retailers.

On the top-down front, Tuesday brings the February consumer confidence report, from which economists expect a dip to 109.5 from January's 110.3, the highest level in over four years.

"The combination of the nasty winter storms blanketing most of the nation during February and the political discord over [Iraq] should drive down consumer confidence a bit for the month," writes Joseph Brusuelas, chief U.S. economist at IDEAglobal. "The reduction in work available due to winter-related disturbances and the diminution in new orders within the manufacturing sector should [also] take the edge off ... consumer optimism."

From the bottom's-up perspective, the coming week brings earnings from a diverse group of retailers. Results from discount giant Target (TGT Quote) and department store stalwarts Federated (FD Quote) and Kohl's (KSS Quote) will provide the broadest insights on the state of the U.S. consumer.

Meanwhile, investors will be looking for signs of whether the better-than-expected January same-store sales at Gap (GPS Quote) were anomalous or indicators of better times.