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The rally continued on Wall Street last week with all major averages closing in the black-in spite of headwinds from Apple (AAPL), which was flat for the week, and Intel (INTC), which closed down 4 percent.

Index

Wkly (%)

YTD (%)

52-Wk (%)

Dow Jones

+1.20

+4.16

+7.30

S&P500 (SPY)

+0.95

+4.19

++12.97

Nasdaq Composite (QQQ)

+0.29

+3.81

+12.49

What's next? What will shape trade next week?

Three things: Macroeconomic data, policy, and high-tech earnings.

The macroeconomic calendar is light for the week, but still includes two reports on housing - December existing home sales and December new home sales; and one report on the direction of the economy-the Index of Leading Economic Indicators.

Analysts expect the two home reports to show continuing strength in the housing sector, with existing home sales rising to 5.10 millions, from 5.04 in November, and new home sales to 385,000, up from 377,000.

Leading Economic Indicators are expected to signal an economic expansion, rising by 0.4 percent, compared to a -0.2 decline in the previous period.

The policy calendar includes a meeting by the Bank of Japan early in the week. Economic analysts and traders will be looking closely to see whether Bank of Japan will implement Prime-Minister Abe's mandate to set the country into a 2 percent inflation - a policy that will unleash a yen tsunami that will change the game for stocks, commodities, and bonds around the world.

The earnings calendar is very heavy next week, with bellwether technology companies like IBM (IBM), Apple , and Google (GOOG) releasing their Q4 results.

Company

Earnings

Revenues

IBM

$5.25

$29.09B

Apple

13.41

54.70B

Google

10.54

12.27

Source: Yahoo.finance.com

How should investors trade these events?

First, they should stay with homebuilders and banks, adding to their positions should the data confirm that the housing recovery gains momentum.

Second, they should short the yen [e.g., buying puts on Japanese Yen Trust (FXY)], and get long on Japanese exporters.

Third, they may want to wait for the earnings reports of all three technology companies, especially Apple's, before they enter new positions on either side of the market -- for different reasons for each stock.

IBM has a big international exposure around the world, especially in Europe, which is floundering in the swamp of stagnation. This means that there is a good chance for disappointment.

Apple has been suffering from a negative sentiment that is hard to shift in the other direction, unless the company comes up with a big earnings surprise or a new product announcement.

Google is still haunted by the last disappointing earnings report, though it has recovered nicely.

Source: 3 Catalysts For Wall Street Next Week