Will August gains give way to September pain?

The S&P 500 logged its best August in 14 years, though there are still some concerns for investors, including the struggling U.S. consumer and the fledgling recovery in Europe. So now that summer is officially over — what can investors expect?

September can be an interesting month — and one that usually is not good for the market. You can debate the reasons why — but it makes no difference really. Lower is lower.

Traders on the floor of the New York Stock Exchange.
Lucas Jackson | Reuters
Traders on the floor of the New York Stock Exchange.

We continue to hear the bears pound the table about that elusive correction but now we are even hearing from some well-known bulls who are raising the warning flag. Jim Paulsen, chief investment strategist at Wells Fargo, now thinks that a 10 percent to 15 percent correction is coming this fall while Russ Koesterich, chief investment strategist at BlackRock, is also singing that same song. Both men seem to be concerned that investors are worried over monetary policy and rising rates.

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This is where it goes off the rails for me. Of course, rates are going to rise but does anyone really think that rates are going to rise uncontrollably? For portfolio managers not to have priced this into their models would almost be offensive. And individual investors should be prepared for rising rates. The key now is that the long-term investor should be laying the groundwork for any dislocation caused by any coming correction. The short-term trader is looking forward to the volatility created by any coming correction.

This week will bring a host of economic data and surely some geopolitical issues that have the ability to create short-term disruptions. Thursday brings the European Central Bank announcement , which many expect will include quantitative easing like we have seen in the U.S. for the past 5 years. This is a KEY event this week — because as the euro-zone news continues to weaken, investors have essentially bet that ECB President Mario Draghi will finally put his money where his mouth is. If he disappoints — or is unable to muster support — then many expect that this will be the catalyst to send global markets into a tailspin. David Kotok of Cumberland Advisors goes so far to say that if Draghi does nothing then "disappointed markets will tank and the region's economies and finances will collapse."

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It is the macro data that investors should be focusing on. We are due to get a barrel full of details resulting in four permutations of news: 1) "Good news is bad news," 2) "Good news really is good news," 3) "Bad news is good news" and 4) Bad news is bad news?"

What will investors take away?

On Monday, European markets closed flat to lower amid light volume as investors reacted to the slowing growth in manufacturing as well as the realization that the Germans confirmed that their GDP fell by 0.2 percent in the second quarter but on Tuesday, global markets are all higher and early indications for the S&P 500 suggest an up day as investors await the many macro data points as well as "the announcement."

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In the U.S., expect a slew of data this week: ISM manufacturing, construction spending, factory orders, Federal Reserve beige book, vehicle sales, initial jobless and continuing claims … but Friday is the day that everyone is watching — nonfarm payrolls. The Bloomberg survey says that 228,000 jobs were created in August. That would represent the 7th straight month of gains exceeding 200,000. The analysis will once again be on types of jobs created and what is happening with wages.

If jobs remain temporary and wages continue to be stagnant — what is that really saying about this recovery? Is good news really good news?

In order for the Fed to really change the course, we would have to see a number with a 3 in front of it for a sustained period of time — say 6 months. And since that is not happening, the current path of rate increases, in my opinion, remains late spring/early summer 2015. The wild card will be a European slowdown — deepening economic unrest in Europe, no matter what the cause will cause the Fed to rethink that schedule no matter how many temporary jobs we create.

Commentary by Kenny Polcari, director of NYSE floor operations at O'Neil Securities. He is also a CNBC contributor, often appearing on "Power Lunch." Follow Kenny on Twitter @kennypolcari and visit him at kennypolcari.com.

Disclosure: The market commentary is the opinion of the author and is based on decades of industry and market experience; however no guarantee is made or implied with respect to these opinions. This commentary is not nor is it intended to be relied upon as authoritative or taken in substitution for the exercise of judgment. The comments noted herein should not be construed as an offer to sell or the solicitation of an offer to buy or sell any financial product, or an official statement or endorsement of O'Neil Securities or its affiliates.