We believe that the stock market has started its next leg higher. The Dow Jones Industrial Average had a record close today and the S&P 500 closed above its recent consolidation. We believe it is only a matter of time before the NASDAQ Composite, NASDAQ 100, and Russell 2000 break above 2007 highs.

The NASDAQ 100 did fall below its 50 day moving average on Monday, but today the index had a strong close on high volume above the average. It is not uncommon for a stock or index to break below a significant moving average and move back above it aggressively in the days that follow. We believe Monday ended the pullback in the index and the new leg higher has started. Strong resistance is in the 1825 area and a break above 1850 will confirm that the new leg has begun.

The S&P 500 closed above its recent consolidation today and is at a new 2007 high. We believe that the index is headed to the higher resistance lines shown on the chart, before a possible push to the resistance at all-time highs. The advance will likely be stalled in these key areas.

The Russell 2000 is extremely close to an all-time high. This index also broke below its 50 day moving average, before it moved back above it within the next few trading days. A break above 800 will signal the beginning of a likely powerful advance and put the index into record territory.

We believe that the new leg higher has begun and that the consolidation period is over.