Buying opportunity or beginning of a serious decline?

That's the question on traders' minds in the wake of last week's global market upheaval, which reminded investors that -- all together now --

it's a small world after all

.

The reaction to China's selloff and concerns about an unwinding of the so-called carry trade amid the yen's rally were stark reminders of the interconnectedness of global financial markets. They also reflect the folly of trying to forecast major market moves, because it's usually the issues people

aren't

worried about that prove most caustic to portfolios.

To wit, last week I

correctly forecast "more weakness afoot," but didn't accurately predict the trigger for the selling.

That said, a number of scheduled events are likely to dictate trading in the coming week, including speeches by

Federal Reserve

Chairman Ben Bernanke on Tuesday and other Fed officials throughout the week; Monday's ISM services index for February, Wednesday's beige book report and Friday's U.S. jobs data.

Beyond our borders, German industrial production data and policy announcements by the Bank of England and European Central Bank are each due on Thursday.

Another 25 basis-point ECB rate hike is widely expected following ECB President Jean-Claude Trichet's reference to the need for "strong vigilance" in February, write Credit Suisse economists Maxine Koster and Kathleen Stephansen. "We do not think recent financial market turbulence will cause the ECB to change tack,

but Trichet is likely to be at his most opaque in the question and answer session following."

Other international events next week include Treasury Secretary Hank Paulson's visit to Japan, South Korea and China.

"I'm sure it will have some symbolic importance," Greg Valliere, director of Washington research firm Stanford Financial Group, said of Paulson's Asia trip. "I'm sure he'll push

China to do more on currencies and may talk about capital controls. Beyond that, it's inconceivable considering the tensions right now he'd do anything more provocative."

Similarly, Valliere would be "surprised if he did or said anything provocative" in Japan either, noting Paulson has consistently refuted complaints the Japanese are manipulating their currency -- a claim undermined by last week's sharp yen rally.

Assuming Paulson does have a calming influence on Asian markets (a big assumption, to be sure), traders' attention will focus on U.S. economic news.

Thursday's surprisingly strong ISM report brought relief to investors worried about a recession in the manufacturing sector. But with the services sector accounting for approximately 85% of the U.S. economy, the nonmanufacturing ISM "doesn't get its due in the economic indicator pecking order," write Koster and Stephansen.

The Credit Suisse economists forecast a reading of 57 for February's report, down from 59 in January but "still a healthy level" and "generally consistent with real GDP growth of about 3%."

Friday's February jobs report is the single biggest event on the calendar. The consensus is for nonfarm payroll growth of 100,000, an average hourly earnings increase of 0.3% and an unemployment rate unchanged at 4.6%.

The data will take on perhaps even greater-than-normal importance given the rising concern about the U.S. economy, as embodied by the reaction to Alan Greenspan's comments about a "possible" recession and the downward revision to fourth-quarter GDP. In addition, the four-week moving average of weekly jobless claims has climbed to 335,000, the highest since October 2005.

Jobs are critical, of course, to consumer spending and confidence, "but also if you add jobs as an employer you have to give employees tools to do their work," says Tobias Levkovich, chief U.S. equity strategist at Citigroup. "From that perspective, job growth is also a meaningful phenomenon in capital spending. There's a very tight relationship."

Levkovich notes consumer spending has remained robust in recent years despite the sharp decline in mortgage-refinancing activity, falling home prices and rising energy prices. That resiliency is due, in large part, to continued strength in the jobs market vs. the conventional wisdom that Americans used their homes as ATMs, he says.

"If Americans were spending

all their home equity, then real consumer spending should have been up 8% to 12% in past four quarters vs. less than 4%."

The state of the consumer will also be revealed this week via earnings from retailers such as

American Eagle Outfitters

( AEOS),

Urban Outfitters

(URBN) - Get Report

and

Chico's

(CHS) - Get Report

.

Meanwhile,

Saks'

(SKS)

results could be the most important, given the outsized influence of high-end consumers on overall consumer spending. I made a similar case

here about

Nordstrom's

(JWN) - Get Report

, although its disappointing results were overshadowed by last week's macro dislocations.

Beyond retailers, a relatively quiet week of earnings also features results from

Hovnanian

(HOV) - Get Report

,

National Semiconductor

(NSM)

and

Goldcorp

(GG)

.

Fearless Predictions

Levkovich is generally sanguine about the market's volatility and upbeat about intermediate-term prospects for stocks. The market, he says, is historically up 80% of the time three months after corrections of 3% or more. Tuesday's wild selling suggested a "cataclysmic crescendo" rather than the start of a bigger correction, he says, as detailed in Friday's

"Real Story" podcast.

The strategist also refuted the idea market participants are overly complacent about last week's events. "A week ago people said there was complacency, but that's a moot argument today," he says. "Everyone is deeply on guard now."

By his own admission, Levkovich is "not worried about the next day or two." For those who are, I direct you to the comments in Thursday's podcast by Dennis Gartman of

The Gartman Letter

, who is forecasting near-term weakness of another 4%-5% in major averages and is short the

Nasdaq 100 Trust

( QQQQ) in anticipation.

While not actively short, Cody Willard, president of CL Willard Capital and a

RealMoney.com

contributor, expressed similar near-term caution in an

interview for TheStreet.com TV on Friday.

Another note of caution: Tuesday's drop brought the

Dow Jones Industrial Average

below its simple 50-day moving average of around 12,500 for the first time since August. Basic technical analysis suggests any near-term rebound will face resistance at that level. A failure to break through would then likely lead to a test of its 200-day moving average at 11,782.

Comparable levels are 1430 and 1344.50 for the

S&P 500

, and 2455 and 2287 for the

Nasdaq

.

For all but the most aggressive traders, prudence therefore dictates letting these technical moves play out or waiting for signs of stabilization before declaring the proverbial coast clear.

Aaron L. Task is editor at large of TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He appreciates your feedback;

click here

to send him an email.