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Why this week will be crucial for stocks

It may be a short week, but it's a big one for the markets.

That's because the all-important jobs data will be released on Thursday, and given the low GDP numbers, many traders say this week's report will not only revealthe true state of the economy, but also could make or break the rally.

Gina Sanchez, founder of Chantico Global, says Wall Street isn't expecting much change from before but that may not be a bad thing.

"The labor participation rate, which is actually down for the year, is expected to remain at its same place, 62.8 percent," said Sanchez, a CNBC contributor. "That basically says that we really aren't expecting a whole lot of necessary improvement. But more importantly, nobody is expecting the numbers to be worse. I think that's where there could be some trouble if we see anything that suggests otherwise."

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Expectations for higher interest rates have been pushed out a bit, notes Sanchez. "St. Louis [Federal Reserve] president James Bullard came out saying that we could see interest rates rising as early first quarter 2015," she said. "That is the soonest expectation we see. That comes at a time when most economists are downgrading their expectations for growth."

"I think this could spell some trouble for the S&P," added Sanchez.

Todd Gordon, founder of TradingAnalysis.com, thinks Sanchez may be right in the long run even if the S&P 500 makes it up to the 2,000 level. It closed Friday up 3.74 points, to 1,960.96.

"When you come up to such a key round number like 2,000, rarely will the market keep that unchecked," said Gordon, a CNBC contributor. "I do think that they will get that number, but momentum has been diverging [and] we are quite stretched from 50-day moving average."

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Gordon thinks the S&P 500 could eventually test lower to about 1,910. "But ultimately, we can't fight the uptrend with subpar data because the Fed is still here."

And, there are economic signals in the market that have Gordon worried. "What's concerning to me is that you're starting to see sectors like utilities, consumer staples, energies – these inflation sensitive sectors start to move up which ultimately will spell trouble for the S&P [500]," he said. "But, as a trader you have to respect the trend for now."

To see the full discussion on the S&P 500, with Sanchez on the fundamentals and Gordon on the technicals, watch the above video.

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