NEW YORK (TheStreet) -- The Russell 2000 peaked on July 1 while the other major averages continued to set new highs, including on Friday. The weekly chart for the small-cap stock index is now technically negative.

Why should you care? Because the signs are similar to what happened before the 2008 market crash.

As it is doing today, the Russell 2000 peaked first among the major averages back in July 2007. The Dow Jones Industrial Average and S&P 500 peaked in October 2007 and the Nasdaq a month later. The Dow Transportation Average continued higher until May 2008.

This past May Fed Chief Janet Yellen, answering questions before Congress' Joint Economic Committee, said there were pockets of "potential misvaluation," including overvalued small-cap stocks. After these comments the Russell 2000 set its 2014 low on May 15 before rebounding to the all-time high on July 1.

My market-timing signal confirms significant stock market highs occur when the five major equity averages have simultaneous weekly closes below their five-week modified moving averages with declining technical momentum.

Let's take a look at the daily chart for the Russell 2000.

Courtesy of MetaStock Xenith

From the lower left to the upper right the Russell 2000 (1146.92) had been above its 200-day simple moving average (green line) since Nov. 28, 2012, until April 16. The small-cap index was trading around its 200-day SMA when Janet Yellen made her May 7 comments. The index shrugged off the overvaluations, setting an all-time intraday high at 1,213.55 on July 1. Note the "double top" above 1200 on March 4 and July 1.

Given a downtrend this week the 50-day simple moving average (blue line) will cross below the 200-day resulting in what technicians call a "Death Cross."

Let's take a look at the weekly chart for the Russell 2000.

Courtesy of MetaStock Xenith

The weekly chart for the Russell 2000 ended last week below its five-week modified moving average at 1155.68. My momentum reading, not shown on this graph, is declining, which makes the weekly chart negative. The "double top" is even more pronounced on the weekly chart.

The downside risk is back to the 200-week, now at 915.05 and rising. Testing the 200-week provided a small-cap buying opportunity between August 2011 and Oct.2011.

I will be tracking the five-week modified for the other major averages at 17000 for the Dow Industrials, 1983.4 for the S&P 500, 4512 for the Nasdaq and 8436 for the Dow Transports.

At the time of publication, the author held no positions in any of the stocks mentioned, although positions may change at any time.

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This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Richard Suttmeier, a former U.S. Treasury trader and trading manager in the primary dealer community, has more than 40 years of experience in the U.S. financial markets. Richard is an engineer by education with a master of science degree. He has been writing newsletters and market commentaries since 1984, and his engineering and trading background are the foundation for the combined fundamental and technical analysis used in the stories he writes exclusively for Richard's "Crunching the Numbers" tables provide; key moving averages, weekly stochastic readings, earnings estimates, and value levels and risky levels at which to buy on weakness or to sell on strength. His stories cover: regional and community banks including data from the FDIC Quarterly Banking Profile, homebuilders following NAHB data and single-family starts, and stocks in several sectors including, transportation, healthcare, and retail. During earnings season Richard provides trading guidelines for popular stocks before they report, then scorecards after they report.

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