If upcoming earnings from U.S. retailers are as unimpressive as the rest of the profit season has been, Wall Street could face a tough time justifying a stock market at nine-month highs.
Even with a Greece deal now in the works and the U.S. economic recovery showing stronger momentum, strategists think the market could face resistance in a push higher.
Less than two months into the year, the benchmark Standard & Poor's index .SPX is up more than 8 percent and has already exceeded many analysts' forecasts for the year.
The problem is the market has not seen as much upbeat news out of this earnings season as it has in recent ones.
Earnings have generally come in more disappointing than they have been, said Robert Van Batenburg, head of equity research at Louis Capital in New York. I don't think there's a lot of fireworks coming from last week's financial results.
The index ended Friday at 1,361, its highest since May 2011. That was above a Reuters poll forecast in December that the index would end 2012 at 1,340.
A break above 1,370 would put the S&P 500 at its highest since June 2008, before the September 2008 collapse of Lehman Brothers.
The Dow industrial average .DJI is fast approaching the key psychological level of 13,000, while the Nasdaq .IXIC has been trading at its highest since 2000 and is near the 3,000 level.
S&P 500 earnings performance has so far trailed recent quarters in terms of beating Wall Street's estimates. The percentage of companies beating analyst profit expectations is at 64 percent, according to Thomson Reuters data.
While that percentage has improved since the start of the earnings season, it's below the average beat rate for the past four quarters of 70 percent, the Thomson Reuters data showed.
This week brings results from top retailers, including Wal-Mart (WMT.N) and Home Depot (HD.N). Companies in the consumer discretionaries group so far have a beat rate of 70 percent, above the average for the S&P, but many retailers in the group have yet to report.
The week is seen as one of the last big ones of the earnings period.
With results in already from 404 S&P 500 companies, investor focus already may have shifted away from earnings.
That leaves a lot of focus on the outlook for Europe and the U.S. economy. Data on existing- and new-home sales is expected this week.
News of a deal for Greece, expected to help the country avoid a messy default, has helped drive stocks higher as has stronger data on the U.S. economy.
Euro zone finance ministers are set to meet on Monday about the financial rescue for Greece. U.S. markets will be closed for the Presidents Day holiday.
REACHING HIGHER LEVELS
The market's recent run higher has put it at some key technical levels that some say could cause it to stumble.
The market is likely to reach a short-term top, said Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston.
The percentage of New York Stock Exchange stocks trading above their 50-day moving averages is in the 85 percent to 90 percent range, he said, which is typically a signal that the market is overbought.
He sees a pullback to the 1,260 to 1,270 range on the S&P 500 in the near term.
Some strategists said they would see a break above 1,370 as a key buying opportunity.
You break out to 13,70 to 1,380 and then you have to say to yourself something real is happening here. I'm kind of on the sidelines until I see that, but I will be jumping in if that starts happening, said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.
The CBOE Volatility index .VIX, Wall Street's fear gauge, was down 7.5 percent on Friday and has been below the 25 level for more than two months, suggesting investors are less worried about the market's outlook.