You know the mantra. As the beginning of January goes, so goes the month, and so goes the year. And it s not that off the wall. The first five trading days have gone the same direction as the year 72% of the time over the last 60 years.

This year marked the ninth-most intense upside start for the S&P 500 in the more than half a century, and it s happened despite some eyebrow-raising economic data and a tall economic order for the year ahead.

As traders embark on a shortened week, key housing and inflation data could offer more enthusiasm. The December readings on housing starts and building permits scheduled to be released Wednesday are expected to show improvement. And the December reading of the Producer Price Index is projected to show that inflation remains subdued a positive sign for low interest rates.

Still, to log a win for the rest of the 52-week session, the market will have to overcome some obstacles. A sustained rally faces these four headwinds.

Unemployment

The unemployment rate remained stuck at least 10% for the entire fourth quarter of 2009, but the release never triggered a selloff that derailed the rally. The rate is expected to stay high or even rise this year.

Of course, the unemployment rate can be deceptive it can rise even after job losses stop. When people who had stopped looking for work rejoin the unemployed pool by indicating that they are again looking, the Bureau of Labor Statistics takes a jelly bean out of the discouraged worker bucket and puts it in the unemployed bucket.

But market strategists agree that job growth is a necessary condition for broader economic growth in 2010.

With hours-worked at a record low 33 hours a week, businesses will likely give current employees more hours before they start to hire, says Phil Orlando, chief equity market strategist at Federated Investors.

The government is going to hire 1.4 million census workers in the first half of this year, which should add a couple of thousand of jobs a month, says Orlando. That should put us in the positive column.

If not, there will be problems. At the end of the day, it s the most important thing for the economic recovery to be sustainable, says Bill Stone, chief market strategist at PNC Wealth Management. If you don t have a job you can t have retail sales, or top-line growth, the whole thing becomes a house of cards.

Retail sales declined in December, according to data released by the Commerce Department last week. No matter how efficiently businesses manage inventories, or avoid blowout sales, they need the consumer to show up and spend.

If there s a silver lining, it was that November sales were revised upward and that December sales, despite their sequential decline, were still better than they were last year. Also, inventories seem to have turned a corner. Orlando remains optimistic for an upward revision to the December number, noting that perhaps like the month prior, sales were late to come in.

The market largely brushed off the soft Christmas sales. But a sustainable recovery needs to be self-reinforcing -- sales spur the demand for inventory growth, which triggers more orders to factories and more work in manufacturing, and so on.

Top-Line Weakness

It s no secret that companies can only make so many cuts to bolster their bottom lines. Strategists and economists have been waiting on top-line growth. And if you consider last year s fourth quarter, it s easy to expect a year-over-year improvement.

So far, the results have been mixed. Alcoa s stock fell sharply after an earnings miss and revenue that although better than last quarter and analysts estimates was still down year over year. JP Morgan Chase reported revenue growth but not quite as much as analysts had expected. Intel s fourth-quarter revenue was down 7% from a year ago, but full-year revenue rose 28% and topped estimates.

This is the first time this cycle that we will expect to see positive year-over-year revenue gains, says Orlando. Additionally, we feel the operating leverage will stay in place. The combination should produce fireworks. Or at least nice profits. If we don t that would be problem, he says.

A Fading Stimulus

The government-sponsored incentives to buy cars have expired, and its incentives to buy houses will end later this year. How the market reacts when those incentives disappear will speak volumes about the sustainability of the market s gains. Signs of stability have been promising, but some economists are still citing the dangers of a double dip in the housing market.

The danger is in the spring, Stone says. When those incentives come off, does the floor fall out of these things again? He adds, A lot of things are better, but how do you get down to what s the underlying demand, and how much is government-juiced?