TREND REMAINS

So how much of a slowdown/recession is priced into stocks? That is a very good question as the markets continue to sink led by the manipulated oil service stocks, techs and semiconductors. I wish I had better news to report but the markets are in an ugly downtrend and every rip higher is met with selling witness the solid resistance level known as the 50 day SMA. More bad news is that we are not near oversold levels on the SPX so no good news to report there. After Wednesday's huge rally, which alleviated the oversold conditions, the markets have sold back down to the lows on the NAZ /QQQQ and the small cap IWM proxy isn't faring much better. Keep in the front of your mind the October 2005 lows on the SPX at the 1160 area. The NAZ COMP and the QQQQ are lower now than they were in October 2005 and the question is will they take the SPX larger caps down with them.

Market internals have held steady today at the 2,500 red number and the best performing sectors include drugs, consumers, internets and banks with SOX, oils, India, techs and metals bringing up the rear.

For all those analysts and traders looking for outperformance from the big caps, it is has finally arrived. The problem, like I mentioned weeks ago, is that they are outperforming but they are still going down, just less than the smaller caps. Cash would have been the better trade for the large cap believers.