Coming Week: Danger Ahead

To Vinny Catalano, chief investment strategist at Blue Marble Research, Wall Street is in the midst of a bear-market rally.

"If you look at the price action, it looks like your classic 'two steps forward, one step back' that usually leads to another drop," he says. "I'd expect more drifting around with an upward bias for the rest of August," but "as we get into September and October, things get dicier."

While he believes the problems with the financials are far from over, others are watching small-caps and mid-caps, which have been leading the market of late but may be showing signs of tiring.

Catalano points out that "recently, mid-cap growth has begun to falter," perhaps a signal that the sector is losing steam.

But Ryan Detrick, senior technical strategist at Schaeffer's Investment Research, notes that "the uptrend that started in July looks to be still in place, even though we're in the summer doldrums," largely because "small-cap and technology had a huge week [last] week, on top of big gains" in the prior week.

The major averages were mixed, and ultimately little changed, last week.

The main economic news for the coming week will be Tuesday, with the producer price index from the Department of Labor offering another read on inflation. However, even though the consumer price index came in surprisingly high last week and the PPI may do the same, the markets may worry less than usual because the prices of oil and other commodities have come down so much of late. Crude alone is down under $115, well off its recent high of more than $140.