Coming Week: Danger Ahead

The declines in that area have been fueled, of course, by the renewed strength in the U.S. dollar.

"We're seeing recognition of the troubles in Europe and the increased risk of recession. So a relief rally [in the dollar] based on the view of the U.S. being the 'best house in a bad neighborhood' underscores euro weakness more than anything else," says Greg Collins, chief executive of Fountain Hill Investments.

He says the global banking system is still broken after having been stressed for years by actions such as a flood of cheap money from the Federal Reserve and "rampant speculation," largely in the credit markets.

"The recent crash in the commodities is another example of the deflationary forces this market will ultimately have to endure on a larger scale as a day of reckoning for the excess approaches," Collins asserts.

Also on the economic docket Tuesday, the Census Bureau will send out July data on housing starts and building permits.

"Housing starts is almost an irrelevant number, because the inventory is so large," Catalano says. "Housing in general really needs to continue to have price clear the inventory." He expects it to take nine to 12 months before the inventories can get down to manageable levels, to where the starts number becomes meaningful again.

The pace of earnings reports is slowing down, but there will still be a few big companies to note -- including Dow components Home Depot(HD Quote) and Hewlett-Packard(HPQ Quote), which come out Tuesday.

Much of the action will be with retailers. Home Depot's rival home-improvement outfit, Lowe's(LOW Quote), reports on Monday. On Tuesday, Saks(SKS Quote) and Target(TGT Quote) are out. Wednesday, Ross Stores(ROST Quote) and Limited(LTD Quote) make their announcements, while Thursday brings Barnes & Noble(BKS Quote) and Aeropostale(ARO Quote), and Friday ushers in Ann Taylor(ANN Quote).

Other notable earnings reports will come from BHP Billiton(BHP Quote) and Trina Solar(TSL Quote) on Monday, Medtronic(MDT Quote) on Tuesday, and Burger King(BKC Quote) and HJ Heinz(HNZ Quote) on Thursday.

An item to watch next week is the start of a five-week cycle for options expiration, which Detrick of Schaeffer's says is often bearish.

Also, Collins of Fountain Hill, who likes to watch Goldman Sachs(GS Quote) as an indicator of market direction, notes that the brokerage firm's stock is "hovering above some pretty key levels just north of $150," so it could be a good one to follow in the days ahead.

1 What would best describe your stance heading into the coming week of trading? Bullish Bearish Neutral 2 Which of these sectors do you think is set to move up in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities 3 Which of these sectors do you think is set to move down in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities View the results without voting