We believe that the stock market still has room to grow before a pullback.  The NASDAQ 100 and NASDAQ Composite are still below their 2007 highs, the S&P 500 broke above its recent 2007 highs today, and the Russell 2000 stopped its run today at last week's resistance.

The NASDAQ 100 continues to look the most bearish of the indices that we follow. It is still in a possible head and shoulder formation. A sustained break of the 1825 area would likely push the index to 1850 and invalidate the possibility of the recent consolidation being a head and shoulder formation. Due to the right shoulder slanting higher, the index not falling to the 1750 support during the formation of the possible right shoulder, and recent support being found on the 50 day moving average, we believe that the index will soon break above both the 1825 and 1850 resistance and invalidate the formation.

The NASDAQ Composite looks more bullish than the NASDAQ 100. The index has consistently found support on its 50 day moving average and last week's strong break of the 2475 area suggested that both a test and move above 2007 highs would soon occur.

The S&P 500's advance today stopped at our first resistance line. We believe the index is headed to the second resistance line (around 1480) before a pullback.

The Russell 2000 is right below all-time highs. We still believe that the index will push to the 830 area before a pullback occurs.

Even though the NASDAQ 100 and NASDAQ Composite continue to lag, we believe that the strong advance we have been waiting for is just beginning.