Wall Street Will Be Listening Closely to Obama [Video]

The Dow Jones Industrial Average's ($INDU) eight-week winning streak is on the line in the days ahead, and it'll face perhaps it's toughest test of the year so far. Not only will traders contend with a slew of high-profile earnings reports, key economic data and a Federal Reserve meeting, but Tuesday brings President Barack Obama's State of the Union address.

As much as anything, traders will be reading between the president's lines to see what the administration's new approach means for business and the market, says Doreen Mogavero, president and chief executive of Mogavero, Lee & Co.

President Barack Obama
President Barack Obama

"Language at this point in time is very important," the veteran New York Stock Exchange trader says. "We all kind of know where we are right now, and we've come a long way very quickly. But this could be a time where people who've had tremendous gains might be a little hesitant as to how much higher can we go and take a little money off the table."

The market's technical conditions remain overbought and sentiment, a contrarian indicator, is robustly bullish. After tacking on more than 850 points in the last couple of the months, the Dow is overdue for a cool-off. See the chart below.

With nearly half of the 30 Dow components and a quarter of the S&P 500 ($INX) reporting quarterly results this week, econ data and the president's address, this could be as good a time for profit-taking as any.

"We may see the markets doing a little bit of back-and-forth this week," Mogavero says. After all, it's hard not to be bullish on the market longer term after the run we've had, she says, but at some point some traders will start to realize those gains and begin to reevaluate their positions.

For more on Mogavero's take from the floor of the NYSE (NYX), see the video above.

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