The stock market continues to move sideways and pause before the next leg higher. The NASDAQ Composite and NASDAQ 100 are extremely close to breaking out of their bases and into multi-year highs. The S&P 500 is still consolidating, while the Russell 2000 currently looks the most bearish.

You can see from the chart below that the NASDAQ Composite is right near the high of its two month consolidation. A sustained break and close above 2470 will signal that the new leg has begun.

The second chart suggests a possible target for the NASDAQ Composite during this buy signal. We have used Fibonacci lines to show that if the next move higher is the same percentage gain as the leg from July that the index could be headed to the 2900 area. Also, you can see the significant resistance that lies in this area as well. We believe that it is possible for the NASDAQ to extend this far before our system triggers a sell signal.

The S&P 500 continues to consolidate and has remained above our support lines. If the NASDAQ does move to the 2900 area, then we feel the S&P 500 will definitely pause in the resistance lines shown on the chart, but within this signal will move to the resistance at all-time highs at a minimum.

The Russell 2000 has a much more bearish look to it. It needs to break above our line at 780, in addition to moving above the 50 day moving average, to improve its short-term technical direction. A break above 800 will signal the beginning of the new move in the Russell 2000.

The last two days have been very constructive in the stock market, as the NASDAQ Composite and NASDAQ 100 have shown strength and have greatly improved their technical position. We feel it is only a matter of days before these indices break to multi-year highs and the S&P 500 and Russell 2000 quickly follow suit.