Editor's Note:

Better than expected economic data and finally some good news out of Europe helped fuel another big weekly gain for the stock market. Early in the week there were doubts about the highly anticipated EU summit, especially when the EU finance ministers postponed their meeting. Yet by week's end it seemed that the EU leaders had agreed to cut Greece's debt burden by 50%, issued plans to recapitalize the major EU banks, and raise the EFSF rescue fund to $1.4 trillion.

All this good news was enough to push the S&P 500 index past potential technical resistance at its simple 200-dma. Yet now the S&P 500 is up almost +20% from its October low near 1074. A 20% move in less than a month is pretty incredible and stocks are now overbought and way overdue for some profit taking. A pull back in the next week or two would be both normal and healthy.

Unfortunately my crystal ball to predict the future is a little bit murky. We don't know how deep any pull back might be. I'm not adding any new trades tonight. This past week we added five plays from the watch list to the active trade list. I've added three new watch list candidates tonight.