U.S. stocks closed modestly higher on Friday, but up nicely for the week overall. The major averages posted gains on the week ranging from about 2.3% to over 3% for the Nasdaq Composite. This was in spite of some weak economic data, particulary in housing. It is clear though that stocks are trading in line with the performance of the Euro, which was higher on the week. The Euro futures ended the week just under 1.24, after trading last week under 1.20. For now, the correlation is very strong, so be aware of any major weakness in the Euro.
Due to the strong performance of stocks over the last two weeks, many stocks have broken out to new highs. In fact, my list of high momentum stocks, based upon my current filters, has expanded quite a bit. This is an indication of a market that has some strength.
In the week ahead, we'll see some more important economic data, but the bottom line is that stocks will be most impacted by issues in Europe and the performance of the Euro.
As the market has generally been to the upside for a few days, the best daytrading opportunities are likely to the short side over the next couple of days.
Scott Cole
www.bestdaytradingstocks.com
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