On Friday, the Dow fell 100 points, the S&P 500 fell 12 points and the Nasdaq fell 28 points following JP Morgan’s (JPM) report of heavy fourth quarter loan losses in mortgages and credit card holdings. Investors are increasingly doubtful about profits in the financial sector.

In the upcoming week, fourth-quarter results from most of the largest banks, technology and airline companies will be reported. Wall Street is preparing to see bank figures confirm continued credit losses and weak lending, and is hoping data will point to a more positive outlook for 2010.

Google (GOOG) is expected to show 20 percent growth in revenue over the same quarter in 2008, but investors are concerned about the possibility of the company’s withdrawal from China. IBM results are expected to show that tech spending is recovering, with fourth-quarter profits up 20 cents over 2008, but without any increase in revenue.

Among the six largest airlines, only Southwest (LUV) is expected to show a profit. Analysts hope to see the industry provide evidence of resumption in business travel.

On Capitol Hill, the U.S. Senate will return to work on bank regulation reform and consideration of the role that the Federal Reserve could play. The House will hold a hearing on compensation for the financial industry’s executives.

Economic data to be released in the upcoming week includes, on Wednesday, housing starts for December. Figures are expected to increase only slightly, following November’s large increase. Also on Wednesday, producer prices are anticipated to confirm that inflation continues to be of little concern.

On Thursday, initial jobless claims are expected to settle down after last week’s surprisingly high increase.

7 Stocks to Watch

We're watching seven stocks this week for potential breakouts. Our seven stocks on the watch list are the following:

Baker Hughes Incorporated Public, NYSE:BHI)
Jabil Circuit, Inc. (JBL)
Johnson & Johnson (JNJ)
Parker-Hannifin Corporation (PH)
R.R. Donnelley & Sons Company (RRD)
Schlumberger Limited (SLB)
PNC Financial Services (PNC)

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