The market recovery from its last hiccup has come quickly and strongly. Will this be the latest test of the bull market or has the stage been set up with a trap door? With more earnings reports on the way and a wealth of economic data we just might be able to answer that question soon.
Charts Courtesy of Yahoo Finance
The news of a number of European banks failing stress tests came as no surprise. However, the numbers might have been higher than expected. The market has come back from the latest selloff and “correction” despite Ebola, European recession fears, and a myriad of other media hype. The market responded with the strongest week since January 2013. The buying happened in all sectors of the S&P 500 index. Every sector ETF of the S&P 500 index showed strong positive returns.
Every sector joined the party. The components of the S&P index all had positive returns 
The question is where do we go from here? Since we are almost at the point where the last sell off began we are naturally at a point of hesitation. Every trader is at the edge of the pool and deciding who is going to jump in first. This will give slight hesitation to the beginning of this week. Then if there are investors who can brush off the latest volatility, the buying just might continue until the all time highs are matched. These levels are highlighted below in grey. Matching the all time highs might give the market some sideways action as well before the next move upward. On the other side of that argument, if the market fails to match its previous high, traders may signal for the exit door once again. There would be no need for a detailed explanation either. Participants have been buying since the recent lows. Therefore it is reasonable that if the market hit the all time highs once again, those traders would take profits. 
So even if the market continues its climb there will most likely be some pauses. If the market has problems meeting or beating its recent apex, then that will probably bring an onslaught of chatter about a top being in place. If there was ever a week full of data points to facilitate movement, this is one of them. This week has many popular economic bellwethers, speculative stock earnings, and economic data that traders will look to for guidance or excuses to buy or sell.
Monday – US PMI, US Pending Home Sales, Japanese Retail Trade, Earnings from Merck, and Twitter; Tuesday – US Durable Goods, US Consumer Confidence, Japan Industrial Production, Earnings from BP, Facebook and Pfizer; Wednesday – US FOMC Monetary Policy Statement, Rate Decisions, Asset Purchase Program Adjustment, Earnings from Visa, Baidu, and Wellpoint; Thursday – German Unemployment, US Third Quarter GDP, US Weekly Jobless Claims Earnings from Newmont Mining, Royal Dutch Shell, LinkedIn, and Expedia; Friday – Japan Monetary Policy Statement, German Retail Sales, Eurozone Consumer Price Index, US Core Personal Consumption, Earnings from Exxon Mobil, Chevron, and A-B InBev.
In terms of where some of the major ETFs might close by the end of the week: SPY, the S&P 500 ETF, might land between 192.90 and 200.30; USO, the US oil ETF, may end between 29.70 and 31.50; TLT, the 20+ year maturity US Government bond ETF, may see anywhere between 117.20 and 121.90 by the end of the week; GLD, the gold ETF, may land between 115.30 and 120.80; IWM; the Russell 2000 ETF, may land in between 107.80 and 113.25.
The market has moved in ways that have probably tested the discipline of even the most experienced traders. If it doesn’t move, that is no excuse for not enforcing that discipline.
Good luck and trade rationally.