Sam Collins

Can the Markets Break Out?

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Crude oil for September delivery rose 36 cents to $70.52 a barrel, and the Energy Select Sector SPDR (XLE) closed at $51.47, up 62 cents.

Gold (December contract) rose again on a weaker U.S. dollar, closing up $4 at $956.50. The PHLX Gold/Silver Index (XAU) gained $4.32 to $148.99.

What the Markets Are Saying

Yesterday's seemingly minor advance by U.S. stocks took all three major indices to within just a hair of another breakout. And, yet, the lethargy of trading, along with a preponderance of negative internal indicators, seemed to say that we will most likely pull back to the next area of support.

But a break by the S&P 500 above a resistance line drawn from the March high to the June highs would signal that a powerful new advance is under way.

That line connects precisely to this week's high at 1,013. A close above that line and the Aug. 7 high of 1,018 would most likely lead to another run by the bulls.

But with the inability to break 1,013 and our first target of 1,005 to 1,010 already met, the chances are better than even that we will pull back to the first support zone, the 20-day moving average at around 985. And a failure there could result in a fall to 945 to 950.

See the S&P 500 chart.