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Small Caps Are Breaking Out Above 15 Year Resistance While Valuations Are Stretched

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Chris Kimble is the founder of Kimble Charting Solutions, an investment research firm in Salina, Kansas. Chris is a seasoned trader and a master market technician and the charts he draws are both soundly constructed and engaging. You can follow his awesome Tumblr HERE.

Several popular U.S. stock indices are at or near all time highs.

Recently, the Russell 2000 Small Cap Index just broke above an important 15 year resistance line. Soon, we will see if the Dow Jones Industrials, the NASDAQ, the NYSE and the Wilshire 5000 can follow suit.

However, these rallies are occuring while valuations are 66% above the 114 year4 average valuation line (see charts below).

 Eventually, either earnings will catch up or stocks will begin lagging.