The profit taking Friday dampened some of the enthusiasm after Thursday’s powerful gains. Outcome of the Greek elections dropped the S&P futures sharply late Sunday but rebounded sharply from the lows and are now slightly positive. The EuroZone markets are holding nice gains ahead of the US opening. The Nasdaq Composite and Dow Transportation Average had the best weeks, both up over 2.4% for the week. This was in spite of the Transports 1.7% drop on Friday. Some of the daily technical studies, like the % of S&P 500 stocks above their 50-day MA (see chart), do suggest that the market’s correction is over. A further rally is needed early in the week to confirm a move back to the December highs. At the start of the New Year, I reviewed those Nasdaq 100 stocks that had closed December 2014 nearest to their monthly starc+ bands. When prices are near either of the monthly bands, the probabilities favor a move in the opposite directions as prices revert to the mean. I also emphasize that typically the most overbought stocks are generally market leaders which are outperforming the S&P 500.
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