![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEinHyfLHZmc-EP9Hi3e-gS2JbUQsiOm-eh-pzif8XKl4P0uJYopxXGYcQPl6VjFnBlhcn3uOVFnapyHOdeXo93aEDmoc6JKa2snC5Sdi1BxqajV7wpI6HDbc05TuBK2BLLLx2nXaQ/s400/SPXAD041108.gif)
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjyPb6ZMD5uPgRYE2RHVfFZ3SLH87W57f9qbpmng-7FZfvNvnz6QZQuqq6RgJuTU8ufFM_Acx9C03i5pKQcGWP3Gp2XlhCqToncy3EUrzoil484pKBw7aJPv2wmDVPhYAXM-UBU-g/s400/NDXAD041108.gif)
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh5xm4bI-BbwrbPCIfvozXdH1Pb0hZ_5cCoqh9oRGrg04X5Nw1F8l3q3iErcoihjReXmJ0YeopKgKmf3dQcGsODIUnEa-3wcznqCEZhifR3Ag-al3J3j9FNI6THrxWl9Dv_Xyu1Zw/s400/DOWAD041108.gif)
* Advance-Decline Weakness - The above three charts from the excellent Decision Point site show how we are testing bear market lows in the advance-decline lines specific to S&P 500 stocks (top chart), NASDAQ 100 stocks (middle chart), and Dow 30 Industrials (bottom chart). The themes of weakness noted recently continued through week's end.
* Sector Deterioration - My recent review of sector strength and weakness found strength confined to a very limited portion of the S&P 500 universe. In the last two weeks, the percentage of Consumer Discretionary stocks trading above their 50-day moving averages has plunged from over 70% to 30%. The corresponding percentage for Financial stocks has dropped from 65% to 28%. Meanwhile, we're still seeing 59% of Consumer Staples stocks trading above their 50-day averages, as money flows continue to reflect defensiveness and fears of recession.
* New Flight to Safety? - I've been watching the tax-free bond funds of late, largely because I committed a chunk of long-term portfolio money toward those. Interestingly, when we had stock market selloffs in August and March, there were selloffs among tax-free bonds, reflecting fears of default. During the recent stock market weakness, however, a number of tax-free funds have been making six-week price highs. We're also seeing some strength carry through to investment-grade corporates. Even as we price in recession, we may be discounting the probability of Armageddon.
.