European Wild Card Carries Into Coming Week
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
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.
"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.