Skip to main content

NEW YORK (

TheStreet

) -- Investment strategists say that Europe remains the wild card for an otherwise cheery stock market outlook for the coming week.

On Monday, during the extended Presidents Day weekend in the U.S., eurozone finance ministers will gather in hopes of wrapping up a rescue package for Greece.

However, Doug Roberts, chief investment officer at Channel Capital Research and author of

Follow the Fed to Investment Success

, says that although the Greek debt deal will likely be "put to bed" this weekend, "outstanding issues" remain.

One of them is public opposition in Greece to tough austerity measure required by the deal. Rioting and looting engulfed the Greek capital last weekend and could re-erupt ahead of the country's April general elections.

The Greek creditors are "going into contract with somebody undergoing a civil war," Roberts said. "How reliable is that contract?" he asks.

And "assume that things

in Greece get put in the box. Italy, Portugal, Spain -- what happens to the rest of them?" Roberts asked of the other troubled eurozone nations.

Roberts, who describes the European debt crisis as an "albatross" to a full U.S. market rebound, says that investors will unlikely want to be too "far extended" in either long or short positions heading into the weekend.

> > Bull or Bear? Vote in Our Poll

"If something goes wrong in Europe, investment will be going lower," agrees Dan Greenhaus, chief global strategist at BITG.

"We've had large run from the bottom, up over 20% in the

S&P

," adds Henry Murray, director of trade desk research, Fogel Neale Partners. "You have a lot of momentum in the market, but also a lot of lingering macro fears about Greece."

Still, says Murray, Europe optimists are unlikely to go "short" heading into the weekend. "If Greece can get a new bailout, the markets could respond positively."

Peter Cardillo, chief market economist at RockwellGlobal.com agrees that "the market may finally be able to deflect from the daily euro headlines, as a possible conclusion on Greece avoiding a chaotic default could be determined on Monday."

"The diminishing fear factor over Greece will allow investors to focus on the economy and strong technical market factors," he said.

The key, short-term technical support level for the

Dow

next week will be at 12,500, with resistance at 13,200, according to Murray. The S&P 500's support level will be at 1320 to 1340, and resistance will be at 1370. As for the

Nasdaq

, the key support level should be at 2900, with resistance at 2975.

U.S. economic data will be light -- but potentially market-moving -- during next week's shortened trading week.

The first major report of the week will come on Wednesday with the National Association of Realtors' reading on existing-home sales for January. Investors will be looking for further indications that the housing market has bottomed out. Sales are expected to have ticked up 2% to a 4.7 million-unit annual rate, according to estimates from

Thomson Reuters

. In December, existing-home sale rose 5% to a 4.61 million annual pace.

Millan Mulrain, senior U.S. strategist at TD Securities, says he's looking for some consolidation of the improving homes sales trends over the past months. "There's every reason to see that the recovery of the housing market is on its way

although it is slow at the beginning stages."

The Federal Housing Finance Agency will follow up later Thursday morning with a read on home prices for December. Prices rose 1% in November, but remained 18.8% below the index's April 2007 peak.

Also on Thursday, the Labor Department will issue its weekly initial jobless claims report. Expectations among investors will likely be high after claims reached a four-year low last week, falling 13,000 to 348,000. Nevertheless, economists surveyed by

Thomson Reuters

expect a rise to 354,000.

The week will close out on Friday with data on consumer sentiment and new-home sales. The final University of Michigan/

Thomson Reuters

index of consumer sentiment for February will be released shortly after the market opens. It is expected to show a reading of 72.8, up from 72.5 previously.

The Census Bureau's report on new-home sales for January is expected to show sales coming in at a 315,000 annual rate after falling to a 307,000 annual clip in December.

Although earnings season has petered out, a few more quarterly reports remain, mostly in the retail sector. Among them will be

Home Depot

(HD) - Get Free Report

,

Wal-Mart Stores

(WMT) - Get Free Report

,

Macy's

(M) - Get Free Report

,

Saks

(SKS)

,

TJX

(TJX) - Get Free Report

,

Limited Brands

(LTD)

,

Dollar Tree

(DLTR) - Get Free Report

,

Target

(TGT) - Get Free Report

,

Kohl's

(KSS) - Get Free Report

,

Crocs

(CROX) - Get Free Report

,

Gap

(GPS) - Get Free Report

and

Deckers

(DECK) - Get Free Report

.

"Retailers are domestic in nature," says Greenhaus. "They tell us about regional strength in the U.S" and how consumers are behaving in the various income brackets.

"Earnings has clearly gotten better" through the earnings season, he adds. "You can say this was a pretty to slightly better-than-average season."

-- 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.