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Jobs Report to Test Bulls in Coming Week

If the major averages do eventually start to pull back, Shreve is not expecting the selling to be long and drawn out. At this point, a pullback of 5% to 7% from recent highs seems reasonable, according to Shreve.

Next week, he will be heavily focused on the March jobs report from the Labor Department scheduled for Friday. Investors will be hoping for four straight months of 200,000 plus jobs growth. The current consensus view, according to Briefing.com, is for nonfarm payrolls to come in at 215,000.

As for earnings, Shreve says he'll be listening closely to what Bed Bath & Beyond (BBY) has to say when it reports its quarterly results on Thursday. The company has established itself as one of the best-run retailers out there with a solid track record of growth.

Pricesmart ( PSMT ) is also on Shreve's watch list. Often referred to as the "Costco ( COST ) of Latin America," the company has shown very good top-line growth in recent quarters.

"The chart looks OK, but the issue I have with the stock is that I'm seeing more signs of distribution --institutional selling -- than accumulation [or] institutional buying," he explains.

Initial public offerings he'll be watching out for next week following a hot week of debuts towards the end of March include Enerkem ( NRKM ) and Erikson Air-Crane ( EAC ). Enerkem, a developmental stage company that converts municipal waste into renewable biofuels and chemicals, is expected to price between $17 and $19.

Erikson Air-Crane, which makes heavy-lift helicopters for government and commercial use, is expected to price between $13 and $15.

With the stock market posting its strongest first quarter in more than a decade Friday, Adam Sarhan, chief executive of Sarhan Capital, sees more gains to come, saying "strength begets strength."

"Most people 'missed' this rally and that is a net positive for future price gains," says Sarhan. He'll get concerned when investors get over-confident about the market going higher.

"Instead, I'm hearing most people say they either missed this rally or are long, but not long enough," he says.

Overall, leadership or leading stocks have expanded nicely over the past few months, which bodes well for the bulls, Sarhan asserts. Several key sectors have participated in this rally, not just one or two random groups, he points out. That housing and financial stocks have been participating in a big way is a good sign for both the major averages and the broader economy, he adds.

Since the March 2009 bottom, the two primary concerns that have caused temporary, albeit violent, pullbacks in the stock market have been European Union debt woes and global growth woes -- either a double-dip recession or a global economic slowdown. At this point, both of these concerns have been allayed or at the very least minimized in the near-term, Sarhan says.

Other upcoming U.S. economic events for next week include March manufacturing data from the Institute for Supply Management on Monday, which is expected to show a reading of 53 for March after coming in at 52.4 the prior month.

February factory orders from the Department of Commerce and the Mar. 13 minutes from the Federal Open Market Committee arrive on Tuesday. February factory orders likely rose 1.5% after falling 1% in January.

Wednesday presents the Automatic Data Processing employment change report for March, a precursor to the aforementioned Friday's nonfarm payrolls data for March. The ADP figure is seen showing a fall to 200,000 from 216,000 the previous month.

On the docket for Thursday is the Challenger, Gray & Christmas job cuts report for March and the usual weekly initial jobless claims from the Labor Department. Initial claims are expected to come in at 355,000.

-- Written by Andrea Tse in New York.



>To contact the writer of this article, click here: Andrea Tse.

>To follow the writer on Twitter, go to http://twitter.com/atwtse .

>To submit a news tip, send an email to: tips@thestreet.com.

Copyright 2011 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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