The internals continue to deteriorate…but you already knew that’s what was going on. Everything we told you that was going on…is now worsening as the small caps lead down and the large caps start to come in. Amazingly, the Russell 2000 is now below the 200 day moving average with the Dow and S&P just one day off their highs.

Bottom line, we suspect there is more to come. Just remember, because of the printing of money, every time the market looked dead over the past couple of years, the pixie dust flew and the market turned back up. The problem is that every move back up came with internals that never reached highs while major indices did. But if there is one other thing sticking out that gives pause it is these 2 numbers….51 and 277. One day removed from highs brings us the numbers 51 and 277. That is 51 new yearly highs on the NYSE and the NASDAQ and 277 new yearly lows. This is an amazing number that tells us that underneath the surface, things are nowhere as good as the new highs in some major indices and tells you the big money is finding the biggest and most liquid names in the market.

Keep in mind, while the small cap indices continue to implode, the only other area even below the 50 day average is the midcaps. We will be watching to see if the DOW,S&P and the NASDAQ follow suit.

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