The stock market is most likely starting another leg higher. We believe that the short-term pullback that happened last week is over. The NASDAQ Composite also had an outside day on Monday and has since followed through to the upside. This is extremely positive for the stock market.

You can see from the first annotated chart that the NASDAQ Composite fell to the blue uptrend line last week before reversing. We are currently above the 50 day moving average and are headed to resistance at 2635.  A break above this area and last Tuesday's high will bring the index to 2675, followed by a move to 2007 highs at 2725.

The S&P 500 is still in its inverted head and shoulder pattern, just like the NASDAQ Composite. Current resistance is 1480 and the falling 50 day moving average. The next resistance areas are shown on the chart. This upleg should bring us to 1540 at a minimum. A push above 2007 highs is possible during the current uptrend. A push above 2007 highs is near definite during this long-term buy signal.

The Russell 2000 is still looking pretty bearish. Support was mostly held on Monday, but we have not seen a powerful rebound yet. This index needs to get to 800 quick, if we don't want a retest of the recent lows in the 740 area. The 50 day moving average is also creating resistance at the 800 area. A sustained break of this area will lead us to be much more bullish about the Russell 2000.

We believe that the short-term pullback is over and another uptrend has begun.