A Short but Busy Week Could Mean More Volatility

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Turkeys for ThanksgivingBy the time this week is over, investors may be most thankful for the fact that at least it was short. The market is closed for Thanksgiving and will log just a half-day on Black Friday, but from today through Wednesday, traders will be contending with a heavy slate of economic data and earnings news.

The Dow Jones Industrial Average ($INDU) eked out a gain last week to break a slide going back to Nov. 5, but stocks did so in gut-wrenching fashion. The blue-chip average and S&P 500 ($INX) suffered their biggest one-day meltdowns in three months months before staging a comeback.

Fortunately for the bulls, at least one major anxiety afflicting recent trading should get a rest for a while. Ireland formally agreed to accept a financial rescue package from the European Union and International Monetary Fund. Anticipation of such a move has been lifting the euro and weighing on the dollar. As we've seen for months, when the dollar goes down, stocks and commodities rise. So, a weaker greenback bodes well for equities this week.

Big-Name Earnings Still on Tap

Less predictable is how the market will handle economic news here at home. Now that traders have digested China's latest move to curb inflation and the Ireland debt drama is winding down, this week's raft of data will be in focus. In the days ahead we'll get new- and existing-home sales, Fed meeting minutes, personal income and spending, revised third-quarter gross domestic product, durable goods order, jobless claims and plenty more.

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And if that weren't enough generate a little short-term volatility, earnings season is all but over, and yet some big-name earnings are still on tap. Tech bellwether and Dow stock Hewlett-Packard (HPQ), heavy-equipment maker Deere (DE) and luxury retailer Tiffany (TIF) are just a few of the companies set to report this week. And, of course, Friday kicks off the holiday selling season, with all its implications for consumer spending.

Lastly, the upcoming holiday means trading volume is likely to be low, which tends to amplify market swings. Don't be surprised if this Thanksgiving-shortened trading week leaves investors feeling quite full.
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