It is possible that the stock market is in the process of creating a shorter-term top.  With the NASDAQ Composite near 2007 highs and the Russell 2000 hitting those highs a few days ago, it is certainly easy to make the argument that we are due for a pullback here. The S&P 500 has broken above 2007 highs and we would normally expect a larger move above the 2007 resistance before a pullback,  but the index is only a few points away from  the major resistance area we have talked about  for months now (around 1480) and this could act as such powerful resistance as to push the index back below its breakout point before moving much higher. Strong resistance right above a recent breakout is difficult for an index to move above.

The NASDAQ Composite is less than a percent below its 2007 highs. If we do see a push above 2007 highs it is likely that the index will continue for at least a few percent above the recent highs before pulling back. On the other hand, a pullback from here will likely break the blue uptrend line we have indicated on the chart and push the index toward its 50 day moving average. The 2440 area would be a possible stopping point.

As indicated in the first paragraph, the S&P 500 is near its powerful resistance in the 1480 area. It would not be surprising to see the index pullback here. If the blue uptrend line is broken during the pullback (which it likely will be), support is in the 1440 area.

The Russell 2000 briefly sat above all-time highs and has pulled back the last two days. It is quite possible that support will not be held on the blue uptrend line if a pullback happens here. The index could fall as low as 800 before the long-term uptrend resumes.

It is difficult to say at this point if we have reached a temporary top in the stock market. With the NASDAQ and Russell 2000 being at or near 2007 highs and the S&P 500 near major resistance, we could certainly make a strong argument for a pullback. On the other hand, the recent weakness over the last two days in the NASDAQ and Russell 2000 may be suggesting a brief pullback before another push higher. Regardless, the long-term uptrend is still intact and any pullback from here should be just that, a pullback, and will not suggest the beginning of a long-term downtrend.