It’s shaping up to be another risky week for the stock market longs.  As we mentioned last week, the government has stepped aside and the market will again trade based on its pure fundamentals as opposed to proposed government intervention.  Like we said in last weeks preview, the U.S. consumer and retailers will remain in the spotlight again this week.  The earnings docket is relatively light as earnings wind down, but is loaded with big name retailers again.  Home Depot and Lowes report early this week.  A lot of investors will be looking to them for some guidance on the strength of the U.S. housing market.   I think both firms have the potential to report horrendous sales figures.  They are both notorious bottom line sand baggers and “better than expected” EPS figures should not be shocking to anyone.   We will also get reports from Aeropostale, The Gap, Target and Deere.

The economic calendar is very light which is going to make the earnings reports that much more important.  Rumors of a GM bankruptcy filing are picking up steam and could come to fruition this week.

• Tuesday: April building permits and housing starts
• Wednesday: April Fed minutes
• Thursday: Philly Fed survey, April Leading Indicators, weekly jobless claims

The S&P 500 is down 5% from its recent high.  There is a “buy the dip” mentality out there, but I see no catalyst to drive the markets to new highs from here.  Selling any rally is the prudent way to play this market going forward.