NEW YORK (TheStreet) -- Although the S&P 500 hit another all-time high last week, the picture beneath the surface is much less bullish.
In 2013, what was going on beneath the surface didn't matter. Stocks were moving higher on strong momentum. Nothing else mattered to investors. But, alas, we are not in 2013 anymore. The S&P 500 is close to flat year-to-date; it was up over 9% at this point in 2013. Investors don't seem to be giving equities the same benefit of the doubt as they did last year.
We last saw weakness beneath the surface in mid-January, and a 6% correction followed shortly thereafter. The S&P 500 marched higher in February in recovering from that correction, but has stalled over the past few weeks as we are starting to see signs of weakness.
First, long-term U.S. Treasury yields are moving lower. While many are talking about a "rising rate" environment after the Federal Reserve's statement last week, what we are really seeing is a flattening of the yield curve.
Yields on shorter-duration bonds, such as the two-year Treasury note, are moving higher, while yields on longer-duration bonds, such as the 30-year Treasury bond, are moving lower. This flattening tends to be a contractionary signal for the equity markets.