Ed Hornstein's latest missive, and with his permission.

While the general market indices have been doing their best to hold firm this
month, the underlying internals of the market have been horrid over the past few
weeks.

For starters, the general market hit relative highs on February 18, and sold off
rather aggressively for a nasty quick correction in late February and early
March. While the general indices managed to make marginal new highs this past
month, the underlying internals deteriorated significantly. An examination of
former leading commodity stocks such as CLF, FCX, and WLT show that while the
indices were making marginal new highs, these stocks were under significant
distribution. Throw in the breakdowns in the numerous oil/energy related names,
and one can see that the indices were masking the distribution in many important
areas of the market.

In addition, other areas in the market continued to face intense selling
pressure. The financial/banking stocks, which obviously have been laggards,
continued to sell off as the market was making fresh highs. Names like WFC,
BAC, GS, C, and MS traded below their longer term 200-day moving averages
showing no inclination to rally with the broader market.

Furthermore, the SLV (the market's risk darling since January) entered into a
classic climax top just two weeks ago, and has since broken down on huge volume,
somewhat reminiscent of how the tech and internet stocks climaxed in 2000. This
clearly was a clue that the big money crowd was beginning to move away from
riskier assets and into safer areas. This is evident as defensive groups like
utilities and tobacco have outperformed as have the larger more liquid defensive
Dow names.

All of the above was certainly concerning over the past few weeks, especially
given the choppy up and down see-saw churning action we have seen in the leading
indices near old highs. However the action in the leading growth names the past
few days has unequivocally told us that the market's uptrend has ended.

The most important liquid growth leaders have come under severe distribution in
recent days. Names such as AAPL, BIDU, SINA, OPEN, UA, ARUN, NETL, YOKU, SOHU,
NTES, CAT, and DE have all broken short-term and intermediate support and their
ten-week moving averages on heavy volume. Other leaders that have been putting
in their best efforts to resist the market's distribution finally got hit today
on increasing volume, such as PCLN, AMZN, and WYNN. The clear distribution in
these leading names is arguably the market's most important clue that the trend
is turning to the downside, and that the big money crowd is slowly but surely
distributing stocks after a long rise.

The operative question becomes whether this is a short-term correction, an
intermediate correction, or the beginning of the end of the bull market that
began 26 months ago. Given the action in leading stocks and the fact that many
have failed breakouts from later-stage bases, odds favor we will embark on
something more significant than a short-term correction. Time will tell how
significant the correction is, and whether this is a pause that refreshes (such
as last summer), or a new bear market.

At the very least, we can say that the market's action is extremely unhealthy.
More leaders are breaking down every day showing the big money crowd is selling
aggressively. And, given the evidence described above, this correction has the
potential to develop into something on the more serious side. Staying out of
the market's way and in cash should prove to be vital over the next few weeks,
and perhaps much longer.