While on the surface it seems that markets are doing just fine, there has been a lot of damage done when looking under the surface of the major indices. To begin with, the S&P 500 is not the 500 anymore, but more like the S&P 7. This because the first 7 largest companies of the index comprise over 30% of the market cap of the index. And when we go to the top 50 companies, the market cap is over 50%. This means that while these companies might have double digit gains in many cases, the rest of the market (the other 450 stocks) might be down, and in many cases by a lot.

One chart that is interesting is the number of stocks above their 200 day moving average.

As you can see from the chart, that number is about 62% and falling. In fact, this despite indices being at record high. Almost all breath indicators that I look at are at their low for the year, which generally is not a good thing. But an even more indicative chart of the situation is the highly talked about ARK innovation ETF.

Not only is it down for the year, but it is also down about 30% from its highs of mid-February, which is where most stocks peaked for the year. Yes, there are many opportunities in this market, this because many stocks have been beaten down to scrap levels. At the same time however, it seems that we are entering a risk off faze, judging by the breath indicators that I see.

The bottom-line is don’t judge a market by its major indices, because many times what is actually going on, is not indicative of what the indices tell us.