Most likely the stock market began a small pullback yesterday. Our long-term system is far from being overbought and we believe that the larger trend will continue higher in the months to come.

Yesterday, the NASDAQ Composite broke the blue uptrend line we had annotated on the chart in the last commentary. Today, the index found support at its breakout area of 2630, but we believe the NASDAQ will fall to the 2600 support and possibly the 50 day moving average before continuing higher. If the 50 day moving average is broken, support lies in the 2580 area.

We believe that the S&P 500 is headed to the 1490 support area. It is doubtful that the index will be able to break back above the 50 day moving average in the coming days. If this does happen, we believe it is likely that it will be broken again to the downside and the index will hit this lower support line before moving higher.

The Russell 2000 is likely headed to the 820 horizontal support area. 830 is the next support level, but we feel the index should break it during this pullback.

The stock market is likely beginning a pullback, but the long-term trend remains very strong.