Bulls pushing case for more new index highs

With stock prices at record highs, bulls will try to keep the rally running in the week ahead despite the summer doldrums.

There are a few important earnings reports in the week ahead, including Disney — and retailers, like Macy's, Nordstrom and Kohl's. Monthly retail sales data for July, coming up Friday, tops the U.S. economic calendar, but traders will also be watching overseas as China releases trade data Monday, inflation Tuesday and retail sales and industrial production Friday.

"It's like deja vu. A month ago we had a hot jobs number and the market broke out. Since then, it was a choppy range-bound tape. Earlier this week, there were concerns with oil, and the fact that it is August, a bad month for stocks," said Scott Redler, partner with T3Live.com. "There's been a healthy rotation between tech and biotech, playing catch-up. The banks are grabbing at the baton. If you read the market versus the headlines, there's a lot more to like in the market than what people are saying about it."

Redler said there seems to be room to go higher, and earning season helped when leaders like Amazon.com and Apple had good results. "I don't think the market goes blockbuster. It's August. There's not a lot of power behind it, and it'll probably be very stock specific," he said. "You still have a bout of skepticism, which typically means we could go higher here."

Sam Stovall, chief U.S. equity strategist at S&P Global Market Intelligence, said the concurrent records in the S&P, Nasdaq and the S&P SmallCap 600 index are sending positive signals for stocks. The small-cap Russell 2000 also rallied Friday, jumping 1.4 percent, breaking out of its three-week range.

"That's a bullish sign. Historically, it has been. I think the market was looking for some sort of catalyst, because second-quarter earnings season has pretty much run its course," said Stovall. He noted that earnings for the S&P 500 are down about 2.5 percent for the quarter, but much better than the decline of 5.5 percent that was expected. "Right now, the second-half earnings are supposed to be shaping up to be a V-shaped recovery. I think the payrolls numbers made investors feel things are starting to look better."

Steve Wieting, global chief strategist at Citi Private Bank, said also important to watch in the coming week will be oil. "We should be very much watching the intersection between petroleum and other asset prices."