Redler said he's still long the market, but is hedging because the quick gains have made it riskier. "The next stop traders are looking at is 2,700 to 2,730 ... next week could be a good week for a pause while [the market] digests the move." Redler said next week's reports will be important, but the following week will be key with Apple and Amazon.
Headlines on trade were a positive this past week, including one that the U.S. was considering rolling back tariffs and another that China was offering to ramp up U.S. imports.
"We are going to continue to see these headlines until the deadline," said Cesar Rojas, Citigroup global economist. Rojas said he expects to see a deal between the U.S. and China by the March 1 deadline, and while all the details may not be ironed out, he does not expect to see more tariffs.
"The focus for China is to stabilize its economy. One of the reasons we see a window of opportunity for a trade deal is the growth dynamics for the U.S. and China. We see still growth in the U.S., weakening growth in China for the first half, but for the second half, we see stabilizing growth in China and moderating growth in the U.S.," he said. He said the next senior-level talks at the end of the month could be key.
"I think you want to watch trade. We have a client survey we do once a quarter, and more than half the investors thought we would not get a trade deal by March 1," said Lori Calvasina, head of U.S. equities strategy at RBC Capital Markets. "I think that's part of the reason the market's been acting better in here. It's not that anything has happened, but you have some nice news, news that's moving in a positive direction."
Economic reports in the week ahead will be limited due to the government shutdown, which in itself is a growing risk for markets as economists say it could shave a tenth of a percentage point off GDP growth for each week it continues. Regularly scheduled durable goods will not be available, but there will be existing home sales Tuesday and jobless claims on Thursday, among others.
For the stock market, earnings will be important, with nearly 60 S&P companies reporting. That includes IBM and Johnson and Johnson on Tuesday; Procter and Gamble and United Technologies Wednesday, and Intel and Starbucks Thursday.
Financial companies were a mixed bag in the past week, with some high-profile misses such as Morgan Stanley and J.P. Morgan, with its first miss in 15 quarters.
Earnings growth at this point is expected to be up 14.2 percent, when considering companies that have already reported, according to Refinitiv.
"You have to be a little careful at this point. It's very lumpy when you're coming out of the gate sector-by-sector," said Calvasina. "I think the industrials are going to be an important sector. I'm curious to see what's going to happen to them. The margin expectations have been pretty high, and a lot of the sell-side expectations are baking in expansion." Calvasina said the sector was one of the most vocal last quarter about the impact of tariffs and could have updates on the impact.