Stocks look very weak.

The overall index is holding up relatively well, but “beneath the surface” a bloodbath is unfolding. 

High yield credit breaking down quite badly. As I write this, it is signaling a pullback in the S&P 500 to at least 5,850.

Breadth, which also typically leads the S&P 500, is signaling something similar: a decline to roughly ~5,800.

The bad news doesn’t stop there either. Only two sectors out of the 11 that comprise the S&P 500 are positive in December. They are: Consumer Discretionary and Tech. The other NINE are all red for the month thus far.

Put simply, the only reason the S&P 500 is holding up is due to a handful of large tech plays that receive a tremendous amount of weight in the index. When you remove the impact of these companies by referring to an equal-weighted S&P 500, it’s clear a bloodbath is unfolding.

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