Editor's Note:

Stocks continue to defy gravity with another weekly gain in the books. The S&P 500 is still on track for its best YTD performance in 25 years but it has yet to rally past its 2011 intraday high near 1370. Meanwhile the Dow Jones Industrial Average has been unable to breakout past the 13,000 mark in spite of news that the EU had voted in favor of another bailout for Greece - this time to the tune of 130 billion euros.

The trend is up but we're just one headline away from a correction. We just don't know what that headline will be yet. Don't mistake my caution for bearishness. I'm not bearish on stocks but the market is overbought and due for a pullback. A normal bull-market correction would be in the -3% to -5% range. Thus I hesitate to put new money to work in the market until the major averages alleviate their overbought status.

Of course the market doesn't have to correct lower. It could churn sideways for a time before moving higher again. We are adding three new candidates to the watch list should the market continue to march higher.