Stocks finished the week basically flat. The Dow and S&P 500 were lower for the first time in eight weeks. The Dow was off 0.4 percent at 16,020, while the S&P was off 0.04 percent at 1,805. The Nasdaq was barely positive, up 0.06 percent at 4,062. The big mover was the Russell 2000, down 1 percent for the week at 1,131.
Knapp said he will be watching the shorter end and belly of the Treasury curve to see if the market begins to price in rate hikes, now that it is warming to the idea that a Fed taper is on the horizon. The Fed has asserted it has no plans to raise short-term rates anytime soon, and it is not expected to move until 2015.
The Fed is expected to use the strategy of stressing that it will keep short-term rates lower for longer, hoping to dissuade investors from viewing its tapering of bond buying as a tightening.
Knapp said the futures market is not pricing in more normal 4 percent rates until 2018.
(Read more: Top true-growth stocks for next year: Pro)
"I think the rate-hike cycle will be more aggressive than it's currently priced," he said. "The five-year part of the curve could really sell off sharply."
Emerging markets also bear watching, he said. "I'm hard-pressed to find any investors that are bullish on emerging markets. … I can't imagine they'll have many friends when the Fed starts the process."
What else to watch
Markets will also focus on Washington, where budget conferees hope to get a deal in the coming week and bring it to a vote. That could signal a turning point in what has been a constant series of congressional clashes and set a course for the budget for the next two years.
Financial stocks will be in the spotlight. On Tuesday, the Securities and Exchange Commission, the Commodity Futures Trading Commission, Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. vote on the Volcker Rule, which would ban proprietary trading at banks and limit investments in hedge funds.
Executives from Bank of America, JPMorgan and Wells Fargo are among those presenting at a Goldman Sachs conference Tuesday and Wednesday.
There are also a handful of IPOs in the coming week, including a $2.4 billion Hilton Worldwide offering.
12:30 p.m. Richmond Fed President Jeffrey Lacker
1:05 p.m. St. Louis Fed President James Bullard
2:15 p.m. Dallas Fed President Richard Fisher
6:30 p.m. Dallas Fed's Fisher
7:30 a.m. NFIB small business survey
10:00 a.m. Wholesale trade
10:00 a.m. JOLTS survey
1:00 p.m. $30 billion 3-year note auction
7:00 a.m. Mortgage applications
1:00 p.m. $21 billion 10-year note auction
2:00 p.m. Federal budget
8:30 a.m. Initial claims
8:30 a.m. Retail sales
8:30 a.m. Import prices
10:00 a.m. Business inventories
1:00 p.m. $13 billion 30-year bond auction
8:30 a.m. PPI
—By CNBC's Patti Domm. Follow here on Twitter @pattidomm.