Where Crude Will Go From Here

This column was originally published on RealMoney on Jan. 12 at 3:32 p.m. ET. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.

The Dynamic Trading System remains on its buy signal for the S&P 500 (SPX) today but has no positions in the Nasdaq 100 (NDX).

As I write, the SPX is threatening to confirm yesterday's high-volume breakouts on the Nasdaq Composite and the NDX. Closing confirmation would come on a close above 1427 on the SPX, which looks likely at this point in the day.

The SPX had recently been showing poor relative strength (relative to the tech-heavy Nasdaq Composite and NDX), as energy stocks had been holding the SPX down while crude was selling off. However, today, as crude has stabilized, the energy sector, as represented by the Energy Select Sector SPDR (XLE Quote - Cramer on XLE - Stock Picks), and the oil-services sector, as represented by Oil Service HOLDRs (OIH Quote - Cramer on OIH - Stock Picks), are leading the SPX to the upside.

At this point, with oil down about 33% from its July high and with energy stocks having been laggards, stabilizing oil prices could well be productive for the broad market's near-term prospects. Energy stocks, which represent the largest plurality in the SPX and which tend to move with the price of crude, could rebound, helping to drive the market higher. So it would probably be smart to examine what the price of crude is likely to do.