Macro bears have their pick of worries, but the longer-term technical picture still appears favorable. MoneyShow's Tom Aspray shares which sectors and plays look the strongest as we enter a busy holiday week.

It has been another rough week for the stock market. The Spyder Trust (SPY) lost 1.3% for the week, after it managed to close Friday well off the lows.

The worst-hit sector has been technology, as the Apple-heavy Select Sector SPDR Technology (XLK) is down well over 13%. Though the majority of world markets are also lower, the German Dax is down just 6.4% from its September high.

This week does not appear to be any less volatile. Tensions in Gaza are high, Greece’s euro debt problems have not yet been resolved, and we have the ongoing discussions in the US over the fiscal cliff. So which of these three clouds on the horizon worries me the most?

The potential for another war in Gaza and the chance that it could spread is my biggest worry. It could cause a deep shock to the financial markets, if not the global economy. Unfortunately, neither side is big on compromise, which is the same problem facing the US and the Eurozone.

Despite the rally Friday, the market could still see another sharp break to the downside before we get a strong oversold rally. From a technical perspective, we need to see more than a one- or two-day rally to bring us closer to the formation of a market bottom.

As for the fiscal cliff, I still think that those who sold in fear over its consequences will regret it. I expect many stocks to surpass their pre-election levels in the coming months.

Click to Enlarge

On the global economic front, only China seems to be turning the corner. With the announcement of their new leader, I think the government will do whatever it takes to be sure the recovery lasts.

The Eurozone economy contracted in the third quarter, but as the chart shows, the economies of Germany and France did grow. The level of civil unrest is still high in many of the Eurozone countries, as the level of unemployment continues to get worse. It may take a less austere approach to calm the population. However, I think the squabbling amongst the ECB and the various finance ministers will eventually be resolved

The economic data last week generally did not meet most economists' expectations. Retail sales were down, for instance, which indicated less consumer spending...but this was likely impacted by Hurricane Sandy. The Dow Jones Retail Index has dropped just over 6% from its highs, although starting with Black Friday this week, this is a sector that typically does well into the end of the year.

Hurricane Sandy did seem to have a major impact on manufacturing in the Philadelphia region, as the Philly Fed Survey dropped sharply to -10.7â€"well below the consensus forecast of +4.5. There was less impact on the Empire Manufacturing Survey, but the industrial production report on Friday showed a decline of 0.4%.

Click to Enlarge

The table above reflects the 0.4% gain from September. More of a concern is the trend in the majority of the other large global economies: only China has reported a rise in October. The failure of these numbers to stabilize or improve going into early 2013 could signal a significant area of weakness for the economy.

This week, the economic focus is housing, with existing home sales and the Housing Market Index on Monday, followed by housing starts on Tuesday. Jobless claims will be released Wednesday because of the Thanksgiving holiday, along with the PMI Manufacturing Index Flash.

NEXT: What to Watch

Tickers Mentioned: Tickers: SPY, DIA, QQQ, IWM, GLD