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A data-heavy week could give investors hard evidence to justify a rally that lifted the S&P 500 16.8 percent from its August 31 close to the 2010 closing high hit last week.

But the index has been unable to move above 1,228, a key resistance level, and its chart is brewing a double-top formation, a very bearish signal.

"We're susceptible to a pullback if we don't get any clarity on fiscal policy and if any of this economic data disappoints next week," said John Lynch, chief equity strategist at Wells Fargo Funds Management in Charlotte, North Carolina.

"I would think you're going to see some, not all, smart money pull their investment (out of stocks) the closer we get to 1,228. These guys recognize we still have above 9 percent unemployment, sovereign credit risks, a consumer deleveraging and no clarity as to what businesses should do with their cash."

For the week, the Dow Jones industrial average .DJI and the Standard & Poor's 500 index .SPX each fell 2.2 percent. The Nasdaq Composite index .IXIC lost 2.4 percent.

The S&P 500 brushed the 61.8 percent retracement of its slide from the historic highs in 2007 to the low in March 2009.

This was the second time the index backed away from the 1,228 area and its chart could be drawing a bearish "double top" formation. The last retreat from that level, in April, was the start of a correction that took the S&P to its 2010 low in July.

The S&P 500 dipped on Friday below its 20-day moving average for the first time since September 1 but managed to close above it in a sign that that level, currently just above 1,194, could provide strong technical support.

LET'S TALK ABOUT TAXES

Investors will closely watch a meeting next Thursday between U.S. President Barack Obama and congressional leaders to discuss policy, including tax cuts.

Republicans will take control of the House of Representatives starting in January following their strong gains in the November 2 elections. They have vowed to force a full extension of all tax cuts enacted during the administration of President George W. Bush. Otherwise, the tax cuts expire at the end of 2010.

Most of Obama's Democrats favor extending tax cuts only for the first $200,000 of income of individuals and $250,000 for families.

"Bush tax cuts are very important for the market," said Michael Yoshikami, president and chief investment strategist at YCMNET Advisors in Walnut Creek, California.

"If they're not renewed, that could cost 0.75 percentage point per year in GDP (growth). I don't think any other proposal would have that kind of significant impact. If dividend taxes were raised, that would be a still important but more minor issue," he said.

Hu told a regional business forum in Japan on Saturday that China "will make vigorous efforts to establish lastingly effective means for expanding domestic demand, especially consumer demand."

China's rapid growth has helped to shore up the global economy and spur on Asia while the United States and Europe have struggled with high unemployment and financial woes.

But international tensions over China's growing clout and how it plans to use it spilled over into a summit of the Group of 20 (G20) leading economies in Seoul that ended on Friday.

"China will continue making encouragement of a balanced international balance of payments an important task in ensuring macroeconomic stability," Hu told a business forum in the port city of Yokohama, which is hosting the Asia-Pacific Economic Cooperation (APEC) summit over the weekend.

China has also been at odds with Japan after a sea territory dispute flared in September, and the United States has pressed China over its yuan exchange rate, which Washington argues is held artificially low, unfairly boosting Chinese exports.

"China will continue going forward with reform of the renminbi exchange rate formation mechanism on the basis of retaining initiative, controllability and gradualness," Hu said.

CURRENCY REFORM

China has maintained a drumbeat of criticism of U.S. easy money policies over recent days, claiming that Washington could destabilize the global economy and inflate asset bubbles after the U.S. Federal Reserve announced it was going pump as much as $600 billion into the economy.

Treasury Secretary Timothy Geithner last month put off a decision on whether China is manipulating its currency for trade advantage until some time after the G20 summit and the APEC gathering in Yokohama.

"China will adhere to open development, to a fundamental national policy of opening up," Hu said.

The Chinese president also pointed to the importance of newly emerging economies in the global economy.

"Especially in responding to the international financial crisis, the emerging market economies led the way in economic recovery and have maintained quite fast growth," Hu said.

Separately, Hu met a senior Taiwanese politician, Lien Chan, on the sidelines of the APEC summit to discuss economic relations, which have been at odds since 1949 when Nationalist, or Kuomintang, forces fled to the island from the mainland to escape victorious Communist forces.

Taiwan and China this year signed an Economic Cooperation Framework Agreement, which may pull the island economically closer to the fast-growing mainland and eventually open the way for discussion of their political future.

The robust demand for shares of GM, the American industrial icon which filed for bankruptcy in June 2009, underscores growing investor confidence the auto industry has come through the punishing downturn of the past two years with sharply lower costs and higher profit potential.

GM's IPO is expected to price on Wednesday. The shares are expected to start trading on the New York and Toronto stock exchanges on Thursday.

The landmark IPO will likely price around the top end of the $26 to $29 per share range and the full overallotment option -- additional shares underwriters can sell to help stabilize the stock after it begins trading -- will likely be exercised, three people familiar with the matter said.

There is also "excess demand" for the $3 billion worth of preferred shares GM plans to sell, the sources said.

The strong response also bodes well for upcoming initial public offerings by other auto industry companies that restructured in bankruptcy, such as Chrysler and auto parts suppliers Delphi and Visteon, analysts said.

Just over a year after a politically unpopular $50 billion bailout that left the U.S. Treasury with a 61 percent stake, GM filed to sell about $10 billion worth of common stock and $3 billion of preferred shares. Such an offering would mark the second-biggest U.S. IPO ever after Visa Inc and one of the largest, globally.

The full overallotment could take the total IPO amount to as much as $15.65 billion. It would also cut the U.S. Treasury's stake to just over 40 percent.

Pricing at the top end of the range and based on a diluted share count of roughly 1.9 billion, GM would have a market value of just over $55 billion, roughly on par with smaller rival Ford Motor Co

For U.S. taxpayers to break even, GM needs a market value of roughly $70 billion.

GM is still accepting investor orders for shares in the IPO and is not expected to close the order books until early next week, the sources said. The sources did not have permission to speak publicly and declined to be named.

"There's already a tremendous amount of interest because (GM) restructured themselves completely," said Mirko Mikelic, a fixed-income portfolio manager at Fifth Third Asset Management, who plans to buy GM's preferred shares.

GM lost $88 billion from 2005 through just before its 2009 bankruptcy. Underscoring its turnaround it earned a $4.1 billion net profit in the first nine months of the year and is on track for its first full-year profit since 2004.

GM has said it can now break even at U.S. industry auto sales as low as 10.5 million vehicles. That means the restructured GM would have made money in 2008 when the old GM lost $31 billion.

Industry sales are expected to rise to 11.5 million vehicles this year from 10.4 million last year and are widely expected to recover to the pre-recession level of more than 15 million units in the next few years.

The dividend hike, which sent Intel shares up nearly 2 percent, also reflects a growing trend among technology giants like Cisco Systems Inc (CSCO.O) to give back more cash to shareholders following belt-tightening during the global economic slump.

"(Intel) believes their profitability is sustainable. My feeling is the PC business has been given up for dead for almost six months and there are some clear signs that things are bottoming out and maybe starting to improve," said Arnab Chandra, an analyst at Roth Capital Partners.

Intel's quarterly dividend will increase to 18 cents a share beginning in the first quarter of 2011. The dividend will be paid March 1 to shareholders of record February 7.

The company's shares rose 40 cents, or 1.9 percent, to $21.61 in afternoon trade.

Intel and other microchip companies have wrestled with low demand in a sluggish U.S. economy in recent months.

But in October, Intel Chief Executive Paul Otellini told analysts on a conference call that Intel was seeing greater-than-expected early demand for its highly anticipated "Sandy Bridge" chip, which combines central processing and graphics functions. The company also issued an upbeat forecast for the fourth quarter.

In a statement on Friday, Otellini said Intel's confidence in its business gave it the ability to return more cash to shareholders.

LEANER TECH

A regular dividend is generally regarded as the mark of a mature company that cannot match earlier growth rates or stock gains. Such companies tend to attract more conservative investors and are the antithesis of what many tech companies aspire to in their early years.

But other major players in the technology sector are also returning more money to investors after emerging from the economic slump much leaner and better at generating cash.

Cisco, one of the few remaining major technology companies to resist paying dividends, said in September that it would begin paying them next year, even as demand remains weak in the short term.

"The industry is structurally better positioned from a cash-generating standpoint, and that cash is not generating any interest," said Srini Pajjuri, an analyst at CLSA. "Margins are much better than before."

Broadcom Corp (BRCM.O) began paying a dividend this year and has said it would consider raising it if cash continues to build.

In September, Texas Instruments Inc (TXN.N) and Microsoft Corp (MSFT.O) increased their dividends.

Dallas Fed President Richard Fisher suggested this week that a bubble is already forming in private equity, with cheap debt fueling high-priced deals in an echo of the torrid days of leveraged buyouts before the subprime credit crisis cut off financing in 2007.

Fisher, who argued against the U.S. central bank's decision earlier this month to buy $600 billion in Treasuries to boost the recovery, told a San Antonio audience on Monday he is concerned about signs of "speculative activity" in buyouts, along with stocks, bonds and commodities.

He singled out private equity giant Carlyle Group's recent agreement to buy telecoms firm Syniverse Technologies, saying the price paid rivaled the lofty price tags common in the "pre-crash craze."

"As you know, buyout people do not typically acquire companies with a plan to expand the workforce, but instead with an eye to tighten operations, drive productivity, rejigger balance sheets and provide an attractive payback, usually in shorter time than under normal corporate horizons," Fisher said.

Carlyle agreed to pay a premium of 30 percent for Syniverse. Sources told Reuters that another party had also been vying for Syniverse, but lost out to Carlyle, which perhaps partly explains the premium.

A Carlyle spokesman declined to comment, but Fisher's remarks on private equity's job-destroying potential drew a feisty response from an industry group.

"The truth is that private equity firms often save jobs and grow employment over time; increase spending on R&D, plants and equipment; foster innovation; and deliver superior investment returns and social value," said Robert Stewart, a vice president at Washington-based Private Equity Growth Capital Council, which represents many of the largest U.S. buyout firms.

Private equity firms raise funds from investors such as pension and endowment funds, and pledge to invest that capital over a certain number of years. They typically aim to buy underperforming companies using a large amount of debt, fixing them up and selling them at profit.

Such leveraged buyout deals practically vanished after the credit crisis wiped away access to cheap financing, but have been returning as debt markets and the economy have improved.

Deals today are much less debt-heavy than they were before the crisis, with firms so far this year paying an average of 42 percent of the deal price in cash, compared with 29 percent in 2007, industry figures show.

But some buyout firms, which raised billions when times were better only to find they could not put the money to work, are under pressure to spend the dollars before their investment periods come to an end. There is also greater incentive to buy and sell assets this year, ahead of an anticipated tax hike.

BUBBLE TROUBLE

Kansas City Fed President Thomas Hoenig, who dissented at every Fed meeting this year and called on the U.S. central bank to raise, not lower, borrowing costs, has also warned that further Fed easing may fuel bubbles. But Fisher's comments took the issue further by focusing on a single industry that soared high before stumbling badly in the financial crisis.

Now cheap debt is back, with junk bond yields at their lowest since October 2007, Fisher noted.