The stock market seems to be starting a mild pullback. The NASDAQ Composite and NASDAQ 100 broke out of their two month long rectangle formations to the upside at the end of last week and we believe a little more weakness is ahead before the long-term uptrend continues. It is important to note that even if the support levels that we mention below are broken, our long-term view will still be bullish and we believe that the stock market will just be having a larger pullback than we are currently anticipating.

Today, the NASDAQ 100 closed at its breakout point from the two month rectangle formation. Even though this would usually serve as support, as the climb above the breakout point was so small, we feel it is possible for this area to be broken and for the index to head to its 50 day moving average in the 1785 area. If the NASDAQ 100 does fall to this point, we believe that the uptrend will continue from there. If the moving average is broken, it is likely that the index is headed for support at 1750. At this point, we feel that the 50 day moving average should be able to contain any fall.

The S&P 500 is currently sitting right below recent highs. We believe that any fall from here will not break the support lines that we have talked about for months now (shown on the chart). At this point, we are looking for the S&P 500 to hold above its 50 day moving average and horizontal support in the 1400-1410 area.

The Russell 2000 is looking a bit more bearish. The index has been unable to break all-time highs and has made three attempts since its high in the middle of November. It would be ideal for the Russell 2000 to stay above its 50 day moving average here, but highly unlikely. A fall to 780 is expected at a minimum. If 780 is broken, 770 will become the next support level.

As we mentioned in the first paragraph, we believe that the long-term trend is still up and that any fall from here should be mild. Even if the support areas mentioned above are broken, we still feel that this will only be a pullback within the strong long-term uptrend.