We mentioned last week that we believed it was only a matter of days before the NASDAQ Composite, NASDAQ 100, and S&P 500 broke out of their consolidations and above their 2007 highs. One reason we felt this way was because the Russell 2000 broke out of its inverted head and shoulder formation last week. The small-cap index has continued its move higher and the S&P 500 is at 2007 highs, but the NASDAQ Composite and NASDAQ 100 continue to trail behind.

You can see from the first chart below how the NASDAQ Composite broke above our resistance line in the 2475 area. Currently, the index is less than 1% below its 2007 high. We believe the index will break above its January resistance and continue higher before a pullback occurs.

The NASDAQ 100 is still below the crucial resistance in the 1825 area. On a positive note, the index has had a clean break above its 50 day moving average. After a break of 1825, we see the index headed to the 1850 area (2007 highs).

The S&P 500 ran up against one of our resistance lines today. We have talked about the 1450 to 1480 area being strong resistance for months now. At this point, we find it highly likely that the index will continue to the 1480 area before a pullback.

The Russell 2000 has continued its move higher after the breakout into all-time highs last week. We talked about the possibility of the 830 area stopping the advance last week (before a pullback), and we feel this is still a strong possibility.

Even though the Russell 2000 is up nearly 30%, we still feel there is a lot of room left for growth in the current signal. The stock market has been consolidating for two to three months (depending on the index) and we believe the upward effects of this consolidation are just beginning.