Sam Collins

Explosive Breakout Possible; Buy on Pullbacks

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If the major indices can break through the top of the bull channel, screw on your hat because an explosive breakout could result in a straight line run to our target at 1,245.   Watch this closely since a quick run to the goal would also provide us with a great opportunity to cash in on some of our profits.

But with the Relative Strength Index (RSI) approaching prior overbought numbers, a shallow pullback to the bottom of the channel, now at 1,000, is more likely than a breakout.

Take advantage of any pullback to add to your positions. We are in the second phase of a bull market with much higher prices as the final goal.

Regarding support areas: As most of our readers know, I am convinced that the support zones of the S&P 500 are clearly defined as first, the bull channel, and second, the first line of support at 980 to 1,010, and, finally, the major support at 940 to 960.

Today's Trading Landscape

Earnings to be reported include: Brady Corp. (BRC) and Campbell Soup Co. (CPB).

Economic reports due: Reuters/University of Michigan consumer confidence (the consensus expects 67), wholesale trade inventories (the consensus expects -1%), Treasury budget (the consensus expects -$140 billion), and import prices (the consensus expects +1.2%). 

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