The indices we follow broke above important resistance last week and have since pulled back. There is a strong possibility that the short-term pullback is over.

We no longer have to fear the NASDAQ Composite being in a head and shoulder reversal formation. Last Thursday's move higher completely invalidated this possibility. Currently, the index is in the process of pulling back to its breakout point (from the high on May 7). This was expected. After a breakout, most often stocks and indices retrace to the breakout area. As the NASDAQ is right above the 2575 support level, we believe that the short-term pullback is over. If the 2575 support area is broken, we expect a fall to the 50 day moving average and the 2525 horizontal support level.

The S&P 500 broke above all-time highs last week before pulling back. Currently, support is in the 1500 area. This was also expected, as a pullback is extremely common after an index makes a break above all-time highs that have been held for several years.

The pullback in the Russell 2000 is near completion, if the low has not already been set. Support is in the 830 and 835 areas.

It is likely that the recent short-term pullback has been completed. If not, we expect any further decline to be extremely mild.