Part 2

Secondly, it will indicate that it will reign in and stamp out inflation pressures as they arise. That's something they need to say because there is a camp out there that recognizes the data is getting better and that could pose inflation problems. But at the same time, they need to say that's way off," he said.

The Fed's two day meeting ends Wednesday at 2:15 p.m. with a statement. Economic reports in the coming week include the NFIB small business survey which is released Tuesday, as are productivity and costs and wholesale trade.Wednesday's data includes international trade and the federal budget.
On Thursday, weekly jobless claims, import prices and business inventories will be reported in addition to retail sales.
Consumer prices for July, industrial production and consumer sentiment are released Friday.

Whither Stocks
The Dow in the past week gained 2.2 percent to 9370, while the S&P 500 was up 2.3 percent to 1010.Paulsen also said the "fear" factor that sent markets spinning lower last year is now turning out to be an advantage.Fear last year was one of our biggest problems. It's now become one of our biggest assets. Because our policy officials were so fearful last year, they shut us down with their policy and their words. They also did one other thing that's now a huge benefit - they over eased," he said."We would have gotten nowhere near the juice if they weren't so scared." "Secondly the fear in the business community caused companies to purge inventories and people," Paulsen said.

Companies now have operating leverage that should boost growth. "They overdid it." Paulsen said in a climate like this, an important thing to watch is the market's technicals.

Scott Redler, of T3Live.com, is a technical strategist who watches the market's short term moves. He said the S&P 500 hit an important level Friday, 1015. "The 1015 was the 38.2 percent retracement that a lot of technicians have been watching. That's an area that institutions sell," he said.

Redler said he believes the stock market's gains are now limited before it has a 10 to 15 percent retracement, and that it may have reached its highs for the summer.
"It could be that we've built ins a short term summer top, as we approach a seasonally soft time for stocks," he said.
The next area of resistance would be 1015, and that level could take the S&Ps to 1040, he said. If stocks decline, the support level for the S&P is 1000, a key psychological level.

Earnings Central
Wal-MartWMT reports Thursday, as does NordstromJWN. and Kohl'sKSS . Macy's Mis Wednesday and J.C. PenneyJCP reports Friday.On Tuesday, Applied MaterialsAMAT reports after the bell. Sara LeeSLE