Coming Week: Hardly a Vacation

While the last weeks of summer are typically lazy, next week will be anything but relaxing for traders who will continue to wrestle with swaying oil prices, the pummeled financial sector and a spate of important economic data.

The major averages were tossed back and forth last week as the woes continued for the financials. Shares of Fannie Mae (FNM Quote) and Freddie Mac (FRE Quote) plummeted more than 40%, and speculation built that a government takeover is imminent.

On the bright side, the dollar strengthened and oil prices held below $120 a barrel. Bulls are keeping their fingers crossed that the greenback will keep recovering and hold crude futures in check.

"The trend is favorable, but we're extremely sensitive to crude prices," says Phillip Roth, chief technical market analyst with Miller Tabak. "Crude has reached a downside target area and hit a support level at $110 a barrel. Volume usually gets lighter and lighter as August ends, so we're going to have a pretty thin market next week."

After a relatively light week for economic data, the pace will pick up over the next five days. One of the main releases will come Tuesday, with the minutes from the last Federal Open Market Committee meeting offering more insight into the Federal Reserve's views of the troubled labor and financial markets.

At the Aug. 5 meeting, the FOMC held its target for the fed funds rate at 2%, saying that tight credit conditions, the ongoing housing contraction and elevated energy prices "are likely to weigh on economic growth over the next few quarters."

"It'll be interesting to see what the Fed's rhetoric was during the meeting, but nothing will really come as a surprise," says Art Hogan, chief market analyst with Jefferies.

Housing data will likely paint a mixed picture as Monday's existing-home sales report is expected to show a 0.8% increase to 4.90 million annualized units, and Tuesday's report on new-home sales should show a 1.3% decline to a 523,000 annual pace.