Coming Week: Is the Rally for Real?

Investors will keep hunting for clues next week as to whether the market's recent upswing is sustainable, or set to be eclipsed by a dark economic reality.

General Motors'(GM Quote) potential bankruptcy will still loom large, as will earnings reports from retailers, Hewlett-Packard(HPQ Quote) and firms with major housing exposure. Data on building permits and housing starts on Tuesday should also provide evidence of whether the housing sector is nearing a bottom.

Banks also continue to be part of the equation, as investors guess whether the industry's healthy first quarter was the start of a recovery, or simply a reflection of special items and events that won't be repeated throughout the year. Investors shouldn't be surprised if more news related to the government's stress test and banks' capital positions emerges.

Those with shortfalls, like Bank of America(BAC Quote), may provide more details on fundraising strategies, which must be provided to the Treasury Department by June 1. On the other end of the spectrum, companies like Goldman Sachs(GS Quote), JPMorgan Chase (JPM Quote), American Express (AXP Quote) and Northern Trust (NTRS Quote), which received a clean bill of capital health from regulators, have applied to pay back government investments. If the government allows them to do so, as was rumored Friday afternoon, it will solidify their positions in the winners' circle of stronger banks.

"I think there will be a continued focus on financials, Detroit and retailers," says Len Blum, managing director at Westwood Capital, who believes the recovery will be slow. "It's more of the same -- the market's just looking to see if there was too much optimism in this rally."