Our position has not changed since last week. We believe that the move higher is just beginning and any weakness in the coming days or weeks will allow for higher gains in the months ahead. The stock market indices are far above any major support areas, so a fall from here would not alter our view of the long-term uptrend.

The NASDAQ Composite has broken above April 2006 highs and the RSI indicator is in overbought territory again (above 70). This is a positive sign for bulls. The overbought condition of the RSI shows both strength and commitment in the current uptrend. The breakout has been on lower volume, but the price action has been very healthy. At some point, we would expect a pullback to the original breakout area (2375-2380).

The S&P 500 hit the higher resistance line of our initial target today (1390-1400 area).  As we have mentioned in past commentaries, we believe the index is headed to the resistance area of 1450-1480 this buy signal (indicated on the chart).

The Russell 2000 broke out and made an all-time high yesterday. You can see that the RSI indicator did eventually become overbought in the middle of October, but currently is just below 70. The indicator moving above 70 before a pullback would be a sign of additional strength in the overall stock market. If the RSI does not move above 70 before a pullback it is not a cause for concern.

Reward yourself if you have been patient and did not alter your long positions during the recent correction from May to July. Remember that corrections do happen in long-term uptrends and they should be looked at as healthy, as they allow for continued strength in the months following the correction.