The S&P 500 is internally broken. You don’t see it in price yet, but you can see it in the internals. For weeks I’ve been outlining my concerns of narrow leadership in markets including in late January before the big correction in The Narrow Rally  and even this week in Tech Cracks before the resumption of weakness this week.

The correction and subsequent bounces have deepened these concerns. Why? Because despite rallies that, for now, have saved the trend in price they have utterly failed to repair the damage in internals and I can show you this with one key chart: The cumulative advance decline mix versus the $SPX.

See for yourself, the price advance early in the week rejected precisely at the underbelly of the broken trend line:

While $SPX barely saved its 2016 trend line into the close on Friday we can observe that the cumulative $NYAD trend remains technically busted. Until this trend is repaired all rallies are to be regarded with technical suspicion. If the trend can’t be repaired the signal is structurally bearish for the S&P 500.

This does not preclude further rallies, but represents a big fat warning sign that things are not quite right under the hood, a message further supported by the message I outlined in The Market has a Junk Problem.

It appears the market’s problems are mounting.

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