Stretching the market rally

NEW YORK (CNNMoney.com) -- A two-week advance looks to continue this week, as investors consider the latest on the global economy -- but the early summer correction may not be over.

After slumping almost 14% in six weeks, stocks, as measured by the broad S&P 500, have now gained back just over 6% in the past two weeks. That's good news for investors who were worried that the correction -- a selloff of more than 10% from the highs -- would become a bear market, a selloff of over 20%.

But the stock recovery has been mostly technical and trading-driven, rather than based on changes in the underlying issues that sparked the selling in the first place. That factor suggests another bump down is coming, perhaps later in the summer.

But stocks could ride the bounce for another few weeks, with the Dow turning around after it reclaims its 2010 high of 11,205.03 from April, said Dean Barber, president at Barber Financial Group.

"I'm still bullish for the next few weeks, but beyond that I think we could be heading into a bear market," he said. "The recent jobs reports have been terrible, housing is stabilized but has another leg down ahead of it, and the consumer is slowing again."

His view: "If GDP turns negative in the third and fourth quarter, we're going to see a lot bigger stock selloff."

But markets may also just meander for a while, rather than slide further, depending on what the economic news in the U.S. and abroad suggests, said Robert Siewert, portfolio manager at Glenmede.

"A number of indicators are suggesting slower growth, and fears of a double-dip recession are growing," he said. "It's going to lead equity investors to proceed with caution."

This week brings reports on housing, durable goods orders, employment, consumer sentiment and GDP. The latest on BP in the aftermath of the oil spill and the direction of commodity markets will also be in focus. Gold closed at a record high of $1258.30 an ounce on Friday.

The value of the euro, European debt issues and the impact they may have on the global economy will also remain in focus, particularly as the G-8 meeting gets underway in Canada at the end of the week. In terms of European debt issues, the concern of late has focused on Spain as it fights to raise money amid soaring debt levels and rumors that it needs a bailout like Greece. The other PIIGS -- Portugal, Italy and Ireland -- remain on watch as well.

Federal Reserve: The central bank is meeting Tuesday and Wednesday to discuss interest rate policy, with a decision expected Wednesday afternoon. The bank is widely expected to hold rates steady at levels near zero. As usual, what the bankers say about the outlook for the economy will be critical.

Monday: There are no market-moving economic or corporate events expected on Monday.

Tuesday: The existing home sales index from the National Association of Realtors is due in the morning. The index is expected to have risen to a seasonally adjusted annual rate of 6.10 million units in May, up from a 5.77 million unit rate in April, according to a consensus of economists surveyed by Briefing.com.

The FHFA Housing price index for April is also due in the morning, but is not typically a market mover.

Wednesday: The May new home sales index from the Census Bureau is due shortly after the start of trading. The index is expected to have fallen to a seasonally adjusted annual rate of 427,000 units, from a 504,000 unit rate in the previous month.

The weekly crude oil inventories report from the government is also due in the morning.

Thursday: The Commerce Department releases the durable goods orders report for May in the morning. Orders are expected to have fallen 1.4% after rising 2.8% in April. Orders excluding transportation are expected to have risen 1.25% after falling 1.1% last month.

The number of Americans filing new claims for unemployment is expected to have fallen to 458,000 last week from 472,000 the previous week. Continuing claims, a measure of Americans who have been receiving benefits for a week or more, are expected to have risen to 4,580,000, from 4,571,000 last week.

Oracle (ORCL, Fortune 500) reports quarterly results Thursday evening. The software maker is expected to report earnings of 54 cents per share, up 17% from a year ago, and revenue of $9.5 billion, up 38% from a year ago.

Friday: The revised reading on gross domestic product (GDP) growth in the first quarter is due in the morning. GDP is expected to have grown at a 3% annualized rate, unchanged from the previous reading.

The University of Michigan's final reading on consumer sentiment in June is due in the morning. It's expected to hold steady at 75.5, unchanged from the last reading.