This Is Not Your 2013 Snapback Market Anymore

NEW YORK (TheStreet) -- Very brutal end to last week. It couldn't have been permeated with more mixed signals and divergences.

The S&P 500 made all-time highs while the rest of the market was taken to the woodshed. For a several weeks now I have been pointing out all the divergences and presenting a bearish tone to my pieces on TheStreet.

Let me start off by saying there was nothing bullish about what happened on Friday. This market is screaming that there is trouble ahead. I am not calling a top by any means and I actually do not think we have reached "the top," but I think that a correction (likely deeper than anything we have seen in in over a year) is looming. Having said that, I wouldn't start shorting everything at the start of this week as markets typically don't go straight down and there will be bounces along the way.

Furthermore, earning season begins this week and analysts have lowered expectations among many companies recently. Therefore, we may see upside surprises that will separate the good from the bad. Some stocks will see new money flow while others will experience mass exodus.

Assessing The Damage: The S&P 500, which has been doing a fine job masking the damage being down to the rest of the market, is now below the 10-day moving average (MA) and just a hair away from being below the 20-day MA. More significantly, we had a failed breakout finally confirming what the rest of the market has been signaling.

The Dow Jones Industrial Average has also been masking the damage, but I am less concerned there and rightly or wrongly, don't heed much attention to the DOW theory, which I wrote about here). We are below the 10-, 20-, 50- and 100-day MAs on the PowerShares (QQQ), which tracks the Nasdaq 100 Index, and that I deem a better indicator regarding the overall health of the market than the S&P 500.

We are below the 10-, 20- and 50-day MAs on the iShares Russell 2000  (IWM), which tracks the Russell 2000 Index.

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