Bull run faces test

NEW YORK (CNNMoney.com) -- A three-month stock rally could hit some June gloom, as bulls step aside before resuming the run.

The coming week brings a few economic reports - including April factory orders, the April trade balance and the May ISM services sector report. (See chart for details).

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However, the reports aren't especially market moving. Besides, a little rest right now might be a good thing, analysts say, as it would give investors an opportunity to jump back in at lower levels.

"The amount of money on the sidelines is staggering and some of that money needs to be put to work," said Fred Dickson, chief market strategist at D.A. Davidson & Co. "But bulls know there's not much coming out this month econ-wise or in terms of corporate news."

With little to key off, "my sense is that the market goes sideways in June, with the occasional up day as more deal news comes out," Dickson said.

Yet, any pause or slight pullback would likely be temporary, he said, with the same supportive factors that have boosted stocks for months still in place. Namely: better-than-expected earnings, a strong, but not too strong economy, a Federal Reserve that is on hold and corporate deals, deals, deals.

These factors helped recharge the bulls after a late-February through early March stock selloff that was sparked by worries about a global growth slowdown.

Since early March, stocks have more or less been on a tear. The Dow Jones industrial average and the S&P 500 have both risen for 8 of the last 9 weeks. Both ended last week at all-time highs. The Russell 2000 small-cap index is at a record high. The Nasdaq composite is at a more than six-year high.

And record highs plus no new catalysts equal investors stepping back. That's especially likely as stock investors move into what is often the trickiest time of the year: summer.

Summer, starting with June, tends to be tough for stock investors, as the old "sell in May and go away" expression suggests. It's tough because with fewer traders around, there is less money trading hands and less of an incentive to put new money to work.

"Over the summer, hedge funds, the big institutional traders tend to be more focused on the golf course than on their portfolios," said Douglas Roberts, managing principal at Channel Capital Research.

"There tends to be less liquidity in the market," he said. "And that means the market can be impacted more violently on a short-term basis by news that disappoints."

In other words, much more volatility, less actually happening.

This June is unlikely to be an exception, particularly as there is little expected in the way of market-moving news - other than corporate deals.

First-quarter earnings are done with and the second-quarter earnings reports won't start pouring until next month. The next Federal Reserve policy meeting is not until the end of the month - and besides, the central bank is expected to hold steady on interest rates.

Most of the major economic reports for the month of June were already released Friday, the first day of the month, leaving investors less to chew over in the next few weeks.

However, on the upside, the reports were very positive - including better-than-expected May readings on the job market and manufacturing sector. Also, the core PCE deflator, the Fed's preferred inflation gauge, was short of estimates.

The sense of well-being engendered by that economic news could provide some reassurance to investors for the time being - until the next wave of reports kick in come July.