There is ISM services data Monday, weekly jobless claims Thursday and a final rush of earnings, including Disney and Time Warner. The big event for the bond market will be the auction of $72 billion in 3-, 10-, and 30-year Treasury bonds Tuesday through Thursday. After a big fluctuation in Treasury yields Friday, stock traders are also watching to see if interest rates rise around the auctions, a potential stinger for stocks.
"It's like a vacation compared to this week. All the action in August got packed into three days and then it's over. I don't think we're going to have a big correction, but we could go sideways or slightly down and correct a bit," said Andrew Burkly, head of institutional portfolio strategy at Oppenheimer Asset Management. "I wouldn't be adding here. I'd be a little more cautious here for a couple of weeks until we get more clarity on the September (jobs) number."
On the other hand, J.P. Morgan chief equity strategist Thomas Lee sees a drifting market, taking stocks higher. "The reason is you don't want to short a dull market, and the last couple of years, there was anxiety going into August, either the debt ceiling crisis, or Europe and there aren't those issues this year. I think there's an upward bias to the market, and to the data as well," he said. He believes now is a good time for anyone underinvested in stocks to add to positions.
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Gina Martin Adams, institutional strategist at Wells Fargo Securities, has a more bearish view. She said the market is being driven by fewer stocks, as investors focus on special situations and earnings and that will hold it back. "With the overhang of a potential shift in Fed policy come September, and not a lot of consequential change in the economic landscape, investors are not compelled to do much in either direction," she said. "That creates a risk in and of itself...unless there's some shock data, that comes out in one direction or other, it's hard to imagine the market spontaneously combusting or exploding higher."
The markets have been hyper-focused on economic data, especially jobs, since the Federal Reserve signaled it would decide to wind down its bond purchases, based on the economy's performance. Friday's July employment report showed a disappointing gain of 162,000 jobs, about 20,000 less than expected by economists and 40,000 to 60,000 below what was speculated on in the bond market. Treasury yields, as a result, saw a big swing, first as rates edged higher ahead of the report, and then as they dropped sharply after it. The yield on the 10-year was at 2.6 percent in late trading, after touching 2.74 percent just before the early morning report.
Every economic report in the next several weeks will be important, but the next big one is the Sept. 6 jobs report, since it is the last snapshot of employment before the Fed meets Sept. 17 and 18. Many economists expect that to be the meeting where the Fed votes to pare back, or taper, its $85 billion monthly bond purchases. Treasurys have been pricing in the coming wind down of the Fed's quantitative easing program.
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"Every data point is going to be cumulative evidence as to where the Fed is going to go," said Mark Luschini, chief investment strategist at Janney Montgomery. "We now need economic validation. After having gone through all the big central bank meetings and jobs number, I think stocks are going to go back and fill, kind of the dog days."
The Dow finished the past week up 0.6 percent at 15,658, a new high, and the S&P 500 was up 1 percent to 1709, also a new high. The Nasdaq jumped 2 percent to 3689. The VIX, meanwhile, which measures market volatility fell below 12, to a five-month low.
Trading the dog days
So what do you do? Pack it up, head for the beach and put your portfolio on cruise control?
Strategists whether bullish or bearish, say individual stock names have the best chance of delivering returns in the quiet time between now and the next real period of drama, around the release of the August jobs report Sept. 6.
Lee says focus on the cyclicals, and they were the best performers in the past week, with industrials up 2.1 percent, followed by consumer discretionary and the tech sector, both up 2 percent. He also thinks it's time to expand exposure to Europe, to take advantage of its recovery.
(Read more: Four stock picks ahead of the taper)
In a note Friday, he listed stocks that have positive sales and operating leverage and are recommended overweight by J.P. Morgan research analysts. Among those names are Boeing, Nike, Akamai, Pepsico, PPG Industries, Rock-Tenn Co, Tractor Supply and Whiting Petroleum.
Burkly also likes tech, and his contrarian play is mining names, which have gotten crushed with the selloff in metals.