The Week Ahead By Patti Domm From Market Insider

look out now

As the first quarter earnings season begins, a debate rages over whether stocks will be able to rally on or instead roll over on weak corporate profits and dismal economic news.

Traders have argued for several weeks now that the current rally, which started in early March, is a bear market rally and will soon fade. Instead, it has defied naysayers and brought in buyers looking for a turn in the U.S. economy later in the year.

“What is happening in the market was likely to happen. You had a deeply oversold condition. You didn’t know what the sparks would be. You had a dried out forest, and you just needed some kindling. Then you had a number of them,” said Tobias Levkovich, chief U.S. equities strategist at Citigroup.

“My sense is the earnings numbers are going to be very poor, but who does not expect that,” he said. “So, it gives you some idea, I think, that we’ve got some legs still, and to some extent many, many people have missed it.”

In the coming week, first quarter earnings kicks off with a report form Alcoa [AA 8.17 -0.01 (-0.12%) ] on Tuesday. A handful of other reports are due during the week, including Bed, Bath and Beyond [BBBY 27.60 0.95 (+3.56%) ] Tuesday, and Constellation Brands [STZ 12.20 0.02 (+0.16%) ] and Family Dollar [FDO 31.90 -0.23 (-0.72%) ] Wednesday. Chevron [CVX 70.48 0.17 (+0.24%) ] gives an interim update on Thursday.

From ‘Mad Money’:

* Cramer: Rally Latecomers Should Sit Tight

The economic calendar is fairly light, and the release Wednesday of minutes from the Fed’s last meeting is one of the more important items. Also on Wednesday, the Securities and Exchange Commission considers restoring the uptick rule or other price measure. The uptick rule could allow short sales only when the last sale price of a stock was higher than the previous. Some investors believe the SEC’s reversal of the rule in 2007 allowed short sellers to unfairly drive stock prices lower.

From ‘Fast Money’:

* Your First Move for Monday, April 6

Chain stores provide a window on the consumer’s recent activity when they report March sales Thursday.

Markets Mayhem

Stocks finished their fourth up week with a gain of more than 3 percent, scoring their longest winning streak since October, 2007. The Dow, up 241 at 8017 in the past week, was up 21 percent in the past four weeks, its best move of that duration since May, 1933. It was also the Dow’s first close above 8,000 in two months. The S&P 500 rose 26 points, or 3.3 percent for the week, to 842. The Nasdaq rose 76 points, or 5 percent to 1621.

Investors last week poured money into the financials, which were best performers with a 6.4 percent gains, but they also bought consumer discretionary stocks, which gained 6.3 percent. Defensive issues were the worst performers, with health care down 1.6 percent and consumer staples down a slight 0.1 percent.

Crude oil [[email protected] 52.51 -0.13 (-0.25%) ] was up fractionally and grains and some metals rallied in in the past week as the dollar index lost about a percent. But there was also some interesting action in the Treasury market, where traders bucked up against the Fed’s buying program and the promise of more new issuance. In the coming week, tens of billions of dollars in 3-year and 10-year notes will come to auction.

“My assessment of it is the whole Treasury complex is adjusting itself to the consequence of traction from the Fed and the budget situation,” said Kevin Ferry of Cronus Futures Management. Treasurys were under selling pressure. On Friday sellers dumped the 10-year, which saw its yield rise to 2.909 percent from 2.753 the day earlier.