Quite the rough week we just passed through as unemployment reports depicted effective anemic job growth for the month of May, 2011. Obama has stuck his neck out with the recent downward trends in the rate, but even this has turned against him for May.  Looking forward, what are the key drivers that will impact market psychology to swing momentum in a given direction?

This week, we are currently looking forward to weekly jobless claims to provide any indication as to how June might shape up.  Aside from that, the only real data point for the week will be a measure of our trade imbalance, currently estimated to come in at -$49.0B (per Forex.com).

I expect market movements to trend downward for the week (yet again; 6 weeks in a row). This will, however, go forward on light volume, as the shock of recent weeks has not seemed to yet set into a full panic, or move towards highly conservative assets (Gold anyone?).

Check out next week’s line up: PPI, CPI, Retail Sales, Housing Starts, Industrial Production, and the Phily Fed read out.  Yikes! I, personally, don’t want to have anything to do with highly cyclical names given the associated risk.

All things considered, the consequence of the data points will only serve to lower expectations accross the board.  Isn’t that the best time to at least start looking? The market pricing in all of the negative sentiment shouldn’t be far from this point.  I’m eagerly waiting for this continued down trend to buy into names that have solid demand, despite the continued job growth issues. Don’t get me wrong, none of this is a long term bet, but perhaps 1-3 months looking for 20-30% gains in specific names.  Do some screens… find some solid companies that are being overly punished.

My best guess, is a turn around to begin mid-July through September, as earnings of the noted “solid” companies exceed expectations.

Our challenges today, however, are a consequence of a lack of leadership on the part of the Obama Administration.  Has anyone looked into the number of non-essential events he is participating in?  I’d rather he get a good night’s sleep and be fresh for the next day, than to attend a Jazz music celebration event, or a Bull’s game. Stop campaigning, and start building a strategy you should have been working on two years ago.

The lack of clarity on strategy, and long term impacts to business contribute to the muted levels of growth. Accordingly, innovation is stifled by the void of leadership.

Considering all of this, I’m still trying to get a handle on the market’s psychology, as far as how low we need to get all of the negativity fully priced in.  We’ll have to see a new floor established, but it may be below 12,000 and 1,300 for the DOW and S&P respectively.

On Sunday afternoon, the DOW futures were off by over 100 points.  As of this writing, we are looking at only a 26 point loss on the open.

Two key’s: Look at volume, and monitor the Obama administration for any unexpected announcements this week.

Next week, watch the key economic indicators. No way around it, you just can’t defy reality… or can you.  At the very least, get an understanding as to what the current state of affairs is, before any assessment is made on winners or losers in the second half of the year.