Dollar Could Steer Stocks in Coming Week

Next week, with foreign markets in full force and many U.S. traders taking time off for an extended turkey feast, trading is likely to be light, but even more volatile. Any significant revision on Tuesday to third-quarter gross domestic product -- which first tracked an impressive 3.5% growth -- could shock the market in either direction.

"Usually in a holiday-shortened week, not much happens," says Ace Investment's Chang. "Markets chop around because no one is around. But if there is an event and something does happen, it's exaggerated."

The other economic data to keep a close eye on next week will be existing home sales on Monday, and durable-goods orders on Wednesday. Also the tone of quarterly reports and outlooks from technology firms, retailers, and other consumer-exposed manufacturers will be influential. Hewlett-Packard(HPQ), which prereported operating results on Nov. 11, will issue its full report on Monday, as will Tyson Foods(TSN) and BJ Services(BJS). Barnes & Noble(BKS), Hormel(HRL) and J. Crew(JCG) report on Tuesday, while Deere & Co.(DE) and Tiffany & Co.(TIF) report on Wednesday.

As has been the case for the past several weeks, the market appears to have gotten more selective about stock picks, according to Bryan Place, founder of Place Financial Advisors. Investors are leaving to the side the "low-quality" names that sparked the rally in March, and buying into blue-chip firms on any dips. Place expects consumer staples and recognizable brands like McDonalds(MCD), Procter & Gamble(PG) and Johnson & Johnson(JNJ) to perform well in the near term.

"People didn't stop buying toothpaste from March till now," says Place.

With all the cash on the sidelines, he doesn't believe the rally is over yet, even if the climb upward is choppy. Place is advising investors to watch closely when the market opens each day next week, because with light volume, initial trades tend to be an indicator for the rest of the day. "It could snowball," he says.

-- Written by Lauren Tara LaCapra in New York.

>To order reprints of this article, click here: Reprints