Bulls face a challenging week
The Dow's best stretch since the 1930s could hit some resistance in a holiday-shortened week.
NEW YORK (CNNMoney.com) -- As Wall Street comes off its best four-week run since the 1930s, investors are getting a bit more confident about the longevity of the current rally. But should they be?
After hitting 12-year lows, the major gauges have risen for four weeks straight, with the Dow surging 21.5%, its best four-week run since 1933, when it gained 31%.
"I feel like we're setting up a real generational low, whether we've seen it or are near it," said said John Wilson, chief technical strategist at Morgan Keegan. "But I would expect the market to do some backing and filling over the next six to eight weeks as we get through the bad earnings."
How the stock market reacts to the financial results will be critical, he said. Dow component Alcoa announces results on Tuesday, but reports don't start pouring in earnest until later in the month.
This week is something of a pregnant pause for investors, with no first-tier economic reports on tap and trading limited to four days because of the holidays.
Passover is on Thursday, and many celebrations begin the night before. Although financial markets are open both Wednesday and Thursday, attendance could be lower. Attendance is expected to be especially light on Thursday, ahead of Good Friday, when all financial markets are closed.
April is typically a strong month on Wall Street except during bear markets. According to the Stock Trader's Almanac, it has been the Dow's best month since 1950, for an average gain of 1.9%. But during bear markets, April tends to be a down month, according to the Almanac.
Tuesday: Consumer borrowing costs are expected to have fallen by 1.5% in February, according to a Briefing.com survey of economists. Costs showed a surprise jump of 1.8% in January. The consumer credit report from the Federal Reserve is due out at around 2:00 p.m. ET.
Alcoa (AA, Fortune 500), as per usual, is the first Dow component to report quarterly results. The aluminum maker is expected to have lost 57 cents per share, according to analysts surveyed by First Call. Alcoa earned 44 cents per share in the same quarter a year ago. The report is due after the market close.
Wednesday: The February wholesale inventories report is due in the morning from the Commerce Department. Inventories are expected to have plunged for the sixth consecutive month, falling 0.6% after falling 0.7% in January.
The weekly crude inventories report from the Energy Information Administration is due in the morning.
Passover begins at sundown.
Thursday: March sales from the nation's retailers are due throughout the month. In February, sales at discounters such as Wal-Mart Stores helped sales overall to rise, following four straight months of declines. This month, investors will be looking to see if the consumer is continuing to hang in despite the recession.
The February trade balance from the Commerce Department is due in the morning. The trade gap is expected to have widened to $36.5 billion in the month from $36 billion in January, a six-year low.
Also on Thursday, the government releases the weekly jobless claims report and the March report on import and export prices.