The overbought condition is a likely headwind in the near-term, but the fundamentals are pointing to positive surprises this earnings season.

So far, there are positive signs for upside surprises this earnings season, with confirmation by the number of companies that have given positive guidance to start the year... but stocks are overbought and the Value Traps are leading.

Without the boost from returning GM workers, economists see downside risks to the payroll numbers on Friday, but the underlying employment data have improved as the Energy sector returns to hiring.

The bullish case, from a macro-perspective, is likely to be confirmed or denied this week.

Longer-term trend indicators are positive and now we've gotten leading economic indicators improving for the first time in a while, but sentiment is near the point of becoming a headwind.

The employment report on Friday should be the opposite of last month but likely still has upside to estimates, except the Energy sector is starting to weigh on jobs.

Durable Goods out this week are expected to tick lower, but it doesn't change the view for the remainder of the year.

The setup is there for the retailers this week and checks were modestly positive, but the macroeconomic data remains soft.

The October Industrial Production numbers are likely to be negative on Friday, but are also likely to reverse in the coming months to end the year at a new high and give support for stock prices at new highs.

The employment numbers came in as expected and is favorable for the Consumer Discretionary, which will begin reporting earnings in the coming weeks and are consolidating ahead of the news.