On February 25th, I wrote a blog, on how the markets had put in a candlestick "Hammer", and that more upside should be expected. Since then, that's exactly what we experienced in the markets.

Since then, we've seen some interesting short term developments. First, some of the indexes have made inverse head and shoulder patterns and have also broke higher. Secondly, there is a small discrepancy with the DOW confirming other indexes.

First, let's look at the Russel 2000 Small Cap Index ($RUT) index below. The index has already broken to new highs, and is leading the markets higher. The RSI has reached over bought levels.

Notice the NASDAQ Composite below is following closely behind the $RUT. And, if you look at (not shown) some of the biggest NASDAQ stocks (AAPL, AMZN, and GOOG) they have begun to move higher, which also may support the NASDAQ making new highs on the backs of big tech. stocks.

Second, let's look at both the SP500 ($SPX) and NYSE Composite Index ($NYA) below. They both have made an inverse head and shoulder's bottoming pattern, and both have broke out in price decisively.

The SP500's RSI has a little further to go before reaching over bought, and that indicates more upside could be in the offing, which supports a another new high.

The same comments as the SP500 apply to the NYSE Composite Index.

Lastly, let's take a look at the DOW ($INDU) below. The DOW has been lagging the party. On February 25th, I suggested the DOW could trade up and test the 10,500 area, as we are currently testing the neckline of its inverse head and shoulder pattern.

The Dow is lagging the rest of the indexes, and while it has an inverse head and shoulder's pattern, it has not broken out, it's right at its neck line.

So, "Who's Driving The Bus"?

Bullish View: The bullish view is quite simple. The $RUT has lead the market higher which has been confirmed the NASDAQ and further supported by the $SPX and $NYA breaking out of their bullish patterns. In such a case, the bullish view would be the DOW will play catch up as all indexes move to new highs from the March 2009 bottom. In this view, the markets would deny the very popular Elliott Count by so many, that the triple Zig-Zag up had finished on the prior high.

Bearish View: The DOW is displaying a non confirmation pattern at face value today because it hasn't broke out of it's inverse head and shoulder's patern nor has it made a new high, and a roll over below prior highs would confirm such a non-confirmation, and open the door for further downside and leave the triple Zig-Zag count alive at this point, albeit weakened. If its going to roll over, it needs to happen very soon.

SUMMARY: We should know very soon which view is correct, and if it's higher, the next potential top on a time line is the back half of March or April in my opinion. Also, if it's higher, the Elliott Wave could simply be expanding and the triple Zig-Zag needs on another new high. It seems like the market has been providing very nice short term technical indicators, both down and back up since the prior high, and the trend is the trend until it changes.