Traders are awaiting retail sales, inflation data and big retailer earnings, but it's the stock market's own behavior that could be most key in the week ahead.
The divergence between the big caps and small caps and momentum names became more pronounced in the past week and is viewed as a red flag for stocks. The Dow finished the week at a record high and the small cap Russell continued its move toward correction territory.
The Dow ended the past week up 0.4 percent at 16,583, its second record close this year, while the was basically flat, down 0.1 percent at 1,878.
But the Russell and Nasdaq were both worse for wear, with their worst weekly performance in a month. The Nasdaq was down 1.3 percentto 4,071, now 6.8 percent from its March high, and the Russell fell 2.1 percent to 1,105, down 8.7 percent from its March high.
"This whole year has been extremely frustrating for everyone," said Julian Emanuel, U.S. equity and derivative strategist at UBS. "If you look at the broader indexes, they're motionless. From our point of view, people have basically sold out. People who felt like they had to reduce Internet names, biotech names have done so, and people who wanted to own the underperforming energy, utilities stocks for the last two months have done so…We're in an extreme holding pattern— waiting for something to happen."
Some analysts do not believe the market's behavior is necessarily foreshadowing a big-cap meltdown.
Bespoke Investment Group studied divergences between the S&P and Russell in similar time frames, and found that there have been 15 other periods since the Russell's creation in 1979 when it declined more than 5 percent over 50 trading days, while the S&P was higher.
At least two thirds of the time, the indexes were both positive one month, three months and six months later. There was only one time, in 1981, when the S&P was down more than 10 percent six months later.
The average gain for the Russell over the next six months was 8.7 percent, while the S&P was up an average 7.8 percent.
Stock traders are also watching the bond market, where low yields at the long end have been a concern. A weak 30-year note auction Thursday was a sign to some that the long bond yield may have bottomed. The yield rose out of the auction and was at 3.46 percent.
Strategists say it's less clear where the 10-year note yield is headed. It's been testing the low end of its range. The 10-year yield was higher Friday, at 2.62 percent.
Meanwhile, bond traders are paying close attention to the Producer Price Index Wednesday and the Consumer Price Index Thursday for any elevation. Both increased more than expected last month.
"I think that's the potential surprise, but I'm not sure people are that focused on it," said John Briggs, head of cross asset strategy at RBS.
The expectations are low for much of a pickup in inflation, but if it does rise more than expected, Briggs said there would be a move in shorter duration yields on expectations the Fed could move sooner to raise the Fed funds rate.
Retail sales will also be important, after retailers reported moderately higher sales this week, helped by warmer temperatures and a late Easter holiday.
Developments in Ukraine will also be watched including the weekend's referendum put forth by pro-Russia rebels in east Ukraine to follow Crimea in breaking off from Kiev.
Traders will also be focused on Chinese retail sales and industrial production data, expected Tuesday.
What to Watch
Earnings: Gogo, Babcock and Wilcox, MIBA, McKesson, Rackspace, Renren
12:00 p.m.: Philadelphia Fed President Charles Plosser
2:00 p.m.: Federal budget
7:30 a.m.: NFIB survey
8:30 a.m.: Retail sales
8:30 a.m.: Import prices
10:00 a.m.: Business inventories
10:30 a.m.: Richmond Fed President Jeffrey Lacker
8:30 a.m.: PPI
8:30 a.m.: Weekly jobless claims
8:30 a.m.: CPI
8:30 a.m.: Empire State survey
9:00 a.m.: TIC data
9:14 a.m.: Industrial production
10:00 a.m.: Philadelphia Fed survey
10:00 a.m.: NAHB survey
6:10 p.m.: Fed Chair Janet Yellen at US Chamber of Commerce on small business
8:30 a.m.: Housing starts
9:55 a.m.: Consumer sentiment
11:50 a.m.: St. Louis Fed President James Bullard
—By CNBC's Patti Domm