Editor's Note:

The U.S. stock market continued to rally on Thursday but a good question to ask is why? The economic data out of Europe has been terrible. In an interconnected world like ours if Europe sinks it will weigh on the global economy.

The 18-member Eurozone reported their Q2 GDP was flat. That's below expectations for +0.1% gain. Dragging the EU lower has been a significant slowdown in Germany.

Germany is the EU's biggest and strongest economy - at least it used to be the strongest. Germany's Q1 GDP growth was +0.7%. Their Q2 GDP estimate this morning came in at -0.2%. That's the first time Germany has seen negative growth in over a year.

France is the EU's second biggest economy and their Q2 growth was flat (+0%). After this morning's report French Finance Minister Michel Sapin lowered their 2014 GDP estimate from +1.0% growth to +0.5%.

Meanwhile Italy's Q2 GDP growth was negative and the country is in its third recession in just the last few years.

You could argue that this weakness in Europe will force the European Central Bank to launch their own QE program. You could also argue that this weakness overseas makes the U.S. market the safest place for stock investors (sort of the best house in an ugly neighborhood).

Another warning sign is the flow of money into safe havens like German and U.S. bonds. The yield on the German 10-year bond fell below 1%. Today saw the yield on the U.S. 10-year bond close at 2.4%, the lowest (closing) low in 12 months. Bond yields fall as bonds rally. What does that say about investor sentiment if they would rather buy a bond with a 2.4% yield than put money in the stock market?

Meanwhile the S&P 500's bounce has produced a strong weekly gain but it just closed at 1955. Potential resistance at the simple 50-dma is directly overhead at 1956. The small cap Russell 2000 is also just beneath resistance at its 100-dma and 200-dma.

Considering the negative economic headlines and the indices close just below resistance we are not adding new candidates tonight.