GOOD MORNING. Stocks in Asia closed higher today, European shares are up, and U.S. shares are pointing to a higher open.

With the Dow Jones Industrial Average hovering below the 11,000 threshold, traders will be watching this week’s data for signs of where the U.S. stock market is headed and an answer to the ever-pressing question: Can the rally continue? The two data sets likely to drive the market are the Case-Shiller home price index, which is scheduled for release on Tuesday and will show whether home prices are rising or declining, and the national unemployment rate for March that’s scheduled for Friday.

These indicators help confirm whether the economy is heading for a real recovery – one with job creation, business productivity and consumer confidence and spending. But as of now, the Street expects home prices to show a further decline and unemployment to remain unchanged. Stephen Pope, chief global equity strategist at Cantor Fitzgerald in London, says he’s not looking for a correction in the Dow, which is up 44% from a year ago. “All of the talk of the Fed withdrawing accommodation is nothing but hot air,” he says. “There will be a mild rotation within the impulsive channel, but there really is no need to be pessimistic. The rally is set to last and run.” He says the turning point level for the Dow was 10320 – the 50% mark between its last peak of 14164 that it reached on Oct. 9, 2007 and its low of 6547 on March 9, 2009 – and it is therefore more-than-likely treading in safe territory.

Meanwhile, the S&P 500 is up 48% over the past year, an impressive surge, which some analysts see little reason for. “The mantra is that after breaking technical threshold over technical threshold in what can only be described as a classic 1930-style bounce off a depressed low, we will now see a 61.8% retracement of the October 2007-to-March 2009 plunge, which would put 1,230 as the next key resistance point for the S&P 500,” writes David Rosenberg, chief economist and strategist at investment firm Gluskin Sheff, in a report. The last time the index was there, he points out, the unemployment rate was 6.2% – not 9.7% – housing starts were 822,000 annual rate, not 575,000, and the fiscal deficit was $500 billion – not $1.5 trillion.

It appears that for there to be further growth in the markets – that’s both sizeable and sustainable – economic indicators will need to make much bigger impressions going forward. “It is vital that investors who are not momentum players understand that expected returns should be very low coming,” writes Rosenberg.

IN OTHER NEWS:

  • In an attempt to catch up to Apple (AAPL), Sony (SNE) is rolling out new innovations and revamping its stores. LINK
  • Irish bank shares fell today on worries that the government will have to pump money into ailing institutions. LINK
  • Today’s suicide bombing in Russia is raising concerns about the country’s political stability and a negative market reaction. LINK

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