It looks as if the stock market is in the process of forming a temporary top. As we have said a few times recently, the downward correction that started at the beginning of February will allow higher gains in the weeks and months ahead and is not a signal that the market is about to have a long-term top. We believe any weakness in the coming days or weeks will be a small correction within the continuing long-term uptrend.

The NASDAQ Composite has finally broken above 2007 highs. By looking at most indicators you can conclude that the stock market is becoming overbought enough for a pullback, but subjective analysis of chart formations would suggest that the index will move further beyond its breakout point before a small correction.  Not knowing how much further the index will go (if it even goes any further than today's close) makes it difficult to know where it will fall to before t! he uptrend resumes. Currently we are looking at the 2475 area for a stopping point. This will fill the gap from the gap down at the open that occured toward the end of February.

Unlike the NASDAQ Composite, from a subjective point of view, the S&P 500 has extended enough beyond its breakout point for a pullback. Here, we would expect a fall back to the breakout area of 1460.

The Russell 2000 is looking much like the NASDAQ Composite. It has only begun to break above 2007 highs. This would certainly argue that the index has further to go before a pullback, but the stock market is overbought enough for a temporary top to still happen here.

The most important point is that regardless of any pullback in the near future, the long-term uptrend remains very strong.