BALTIMORE ( Stockpickr) -- Just a week or so into trading in 2012, the New Year has already brought bigger stock gains than all of 2011. The question now is whether stocks can continue their trajectory.
Europe's back in the headlines again, threatening to derail the S&P 500's auspicious 2.77% start, as the possibility of a recession across the pond weighs on traders. While it was only a matter of time until the eurozone got back on investors' minds, the surprisingly low volatility of this week is at least preventing a meltdown until more conclusive data comes forward.
In the meantime, correlations between the broad market and its constituent stocks are swinging higher once again. Unlike the last quarter, where those high correlations were a death knell for trading, bullish techincals in the S&P mean that rising tides could lift all ships in the first quarter of 2012. Traders should keep an eye on the S&P 500 for a breakout above the 1290s -- that would provide a good indication that buyers are in control of the market for a change.
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