Significant internal market weakness suggests that any likely near-term bounce will invite opportunities for further shorts. As major trendline support and the February lows have been broken, we look toward a new significant level of support based on the rally from March 2009 retracing 50% of its gains. That would put the S&P500 near 950 (another 7% lower from Friday's close).
Put/Call did not extend into extreme bearish territory (which would be a contrary indicator and supportive of a rally), as it now sits in modestly bullish (bounce?) levels. The NYMO bullish cross noted previously, was negated last week and further supports the market's internal weakeness.
Relative strength of staples vs. discretionaries surged last week, as defensive "safe" havens are sought. Supporting the bullish case, small caps continue to outperform large caps and growth shows relative strength vs. value.
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