Can the 3-month long stock rally continue?

The Dow has risen in 11 of the last 13 weeks and is on its best tear in 26 years. Investors will try to stretch the run in a busy week ahead.

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By Alexandra Twin, senior writer

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NEW YORK ( -- Stocks have been on the best three-month tear since 1982 -- and there's little in the week ahead to interrupt the flow.

But as the typically sluggish summer months on Wall Street take hold, momentum is bound to slow.

"The move up is going to be slower and we're going to have periods of sideways movement," said Gary Webb, CEO at Webb Financial Group. "But slow and steady is good because it's more sustainable."

The week ahead brings readings on the deficit, jobless claims, retail sales and consumer sentiment. Monday is also the deadline for "stress tested" banks that need to raise more capital to explain just how they plan to do it.

But lately, all news has been good news, or at least neutral news. Investors took in stride the bankruptcy filing of General Motors last week. They also welcomed a May jobs report Friday that showed employers cut 345,000 jobs from their payrolls, versus forecasts for 520,000 jobs. The rationale was that the number was shy of forecasts and suggests the pace of job losses is slowing.

Indications that the intensity of the recession is abating have boosted stock prices and consumer sentiment for three months. Since hitting a more than 12-year low on March 9, the Dow has risen more than 32%, its best 13-week run since Nov. 1982, according to Dow Jones.

Over the summer months stocks will churn in response to different news events, but the trend should remain up, if only because the government has put so much money into the financial system, said Will Hepburn, chief investment officer at Hepburn Capital Management.

"Hopefully that money will build us a stronger foundation, so that when this sugar high gives out, we have something to stand on," he said.

Autos: The automakers will continue to make news next week, although so far the bankruptcy filings of both General Motors (GMGMQ) and Chrysler have not had much of an impact on stock market sentiment.

Chrysler is expected to exit bankruptcy Monday afternoon following an appeals court ruling late Friday that set aside an Indiana pension fund's objections. The ruling lets Chrysler sell a majority of its assets to a new company to be called the Chrysler Group.

The new company will be owned mostly by a United Auto Workers union trust, Italian automaker Fiat and the U.S. government.

The Senate Banking Committee will hold a hearing on auto industry restructuring Wednesday afternoon.

GM's bankruptcy means its being kicked out of the Dow Jones industrial average, come Monday. It will be replaced by Cisco Systems (CSCO, Fortune 500). Also leaving the Dow: Citigroup (C, Fortune 500), which will be replaced by insurer Travelers (TRV, Fortune 500).

On the docket

Monday: The 10 banks that were told to raise additional funds as a result of the government's "stress tests" must submit detailed plans Monday.

Already, the banks have managed to raise a substantial portion of the collective $75 billion, with Bank of America (BAC, Fortune 500) and Morgan Stanley (MS, Fortune 500) among the banks that have already met or exceeded the requirements.

Tuesday: The government's April wholesale inventories report is due in the morning. Inventories likely fell 1% after falling 1.6% in the previous month.

In Washington, the Joint Economic Committee will further examine the bank bailout program, the House Financial Services Committee is holding a hearing about regulating derivatives and the Senate Energy Committee will discuss energy legislation.

Wednesday: A slew of economic reports are due out throughout the day, highlighted by the Federal Reserve's "beige book" reading on economic activity in the afternoon.

In the morning, the Census Bureau will release the April trade balance, with the deficit expected to have widened to $28.7 billion from $27.6 billion in March.

The weekly crude oil inventories report from the Energy Information Administration is also due in the morning, while the May Treasury budget is due in the afternoon.

Thursday: May retail sales are expected to have risen 0.3% after falling 0.4% in April. Retail sales, excluding volatile auto sales, are expected to have risen 0.2% after falling 0.5% in the previous month.

April business inventories, from the Census Bureau, are expected to have fallen 1% after falling 1% in March.

The weekly jobless claims report is also on tap from the Labor Department, along with the May foreclosure report from industry tracker RealtyTrac.

Friday: May import and export prices are due from the Labor Department and the June consumer sentiment index is due from the University of Michigan.

The G8 finance ministers are meeting in Rome Friday and Saturday. Treasury Secretary Timothy Geithner is expected to speak Friday. To top of page

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