Last Friday, all three major indexes ended the week with gains, and the S&P 500 and Nasdaq attained their highest levels since last October. Existing home sales for July, announced on Friday, showed an increase of 7.2 percent, an indicator that the housing slump is abating. That data and continued stronger-than-expected corporate earnings for the second quarter added further evidence to the hope that economic recovery is imminent.

In the coming week, investors will again look to housing figures for evidence that there is reason to keep the rally going. On Tuesday, the Case-Shiller Index of single family home prices is expected to show a slight rise for June, confirming May’s surprising turnaround news that shrinking home values have moderated. On Wednesday, new home sales figures for July are forecast to advance over those of June, offering further substantiation to the reality of economic recovery.

Although investor optimism about housing could bolster the market, other factors hold the possibility of depressing the market. The consumer confidence index for August, to be released on Tuesday, is forecast to be a full point higher than July’s reading, but July fell below projections. On Thursday, second quarter GDP figures are expected to reveal a 1.4 percent contraction, greater than the originally expected decline. And Tuesday’s Congressional Budget Office deficit projection of $1.8 trillion will show the deficit as a percentage of GDP to be larger than any year since 1945.

While second quarter earnings season is nearly over, Dell’s (DELL) report will be evaluated for evidence of corporate spending, and Tiffany & Co’s (TIF) figures will reveal whether affluent consumers are spending rather than saving. A range of other retail sector companies also report next week. So far this earnings season, companies have demonstrated that they’re cutting costs, but investors need to see that they can also increase their revenues.

Learn to trade in Adrian Manz's live trading room.

Join here.

10 Stocks to Watch

We have 10 stocks this week at daily resistance looking to break to new highs. Those 10 stocks to watch are The Allstate Corporation (ALL), Campbell Soup Company (CPB), Caterpillar Inc. (CAT), Eaton Corporation (ETN), Kraft Foods Inc. (KFT), MeadWestvaco Corp. (MWV), Newell Rubbermaid Inc. (NWL), Pioneer Natural Resources (PXD), Pfizer Inc. (PFE), Raytheon Company (RTN), Texas Instruments Incorporated (TXN), and Walgreen Company (WAG).

Dave Mecklenburg is the Editor-in-Chief of TigerSharkTrading.com.