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Therefore, there are quite a few reasons to expect a 3-5% correction in the next four-six weeks. Still there will be stocks to buy if you concentrate on the entry level and risk as not all stocks will correct as sharply as the overall market. I do think that it is a good idea also to take some nice profits if you have them.

The economic news last week was generally quite good and supported my view from last October that the strength in the stock market was a sign that the economy was really better than expected. Last fall, there were quite a few analysts who thought that we were already in another recession.

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The outlook for the housing market continues to improve as while existing home sales were down a bit it was likely because of a lack of supply. These charts from the New York Times show the strong uptrend in prices and the downtrend in the number of existing homes on the market.

This is a bullish combination that has important implications for the economy as the housing market has played an important role in past recoveries. Rising home prices also impact the consumer who is likely to spend more. The New Home Sales data showed an unexpected drop last Friday, but November's data was revised higher and prices are still climbing.

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The leading indicators also were up last week with the weak consumer sentiment the primary negative. More encouraging was the flash PMI report from Markit, which rose to 56.1, thus reflecting "strong improvement in manufacturing business conditions during January."

This week we have a full slate of economic reports starting on Monday with the Durable Goods Orders, Pending Home Sales, and the Dallas Fed Manufacturing Survey. On Tuesday, we get the S&P Case-Shiller Housing Price Index, along with Consumer Confidence.

Of course, this is the week for the monthly jobs report and Wednesday we may get an early read from the ADP Employment Report, which will be followed by the GDP and the announcement from the FOMC after their two-day meeting.

After Thursday's report on jobless claims, we get the personal income and outlays. Also out is the Chicago Purchasing Managers Index, which given the flash report should show improvement. Things don't slow down on Friday, as after the monthly jobs report, we get the PMI Manufacturing Index, Consumer Sentiment, the ISM Manufacturing Index, and Construction Spending.