We may already be in a bear market and just not know it yet.

The Nasdaq 100 hit an all-time high on Friday. It seemed time to pop the champagne and celebrate newfound riches.

But what actually happened is that while the index hit a fresh all-time high, more stocks actually went down than went up!

The last time this happened – when the index made a 52-week high but more stocks declined than gained – was March 23, 2000. Two days later, the bull market ended.

This is not a common occurrence. Over 8,000 trading days it’s happened nine times. It happened in 1984 then not again until 1998.

Then, after that day in 1998, 356 more stocks more stock went down. After three months, the market lost 24% of its value. And by early 2000, the Internet Bubble was over.

Bad things happen when fewer and fewer stocks begin leading the market rally while the rest fall to the side.

First, it means that many of your holdings are already starting to under-perform. Second, by the time the leading shares get hit as traders sell their shares of those companies, many stocks will already be in a defined bear market and down 20% or more from their highs.

In prior reports I mentioned that transport stocks were leading the way down. They’ve been performing poorly based on softening global demand.

I’ve also warned that old-school technology companies were vulnerable. Many of them have had poor earnings reports or are hitting 52-week lows.

So, we are already seeing pockets of stock market weakness. The indexes at all-time highs are only a mirage hiding the underlying weakness.

Of course, unless there is an outright crash, not all stocks will go down at once. Some will signal the way for the rest, like the ones I’ve mentioned.

But in my opinion, we are still in the riskiest end of the spectrum to allocate new money to the stock market. The recent price action of the indexes making new highs, with just a handful of companies carrying those highs, only strengthens my conviction.

Proceed with caution.

John Signature

John Del Vecchio
Contributing Editor

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John Del Vecchio
In 2007, John Del Vecchio managed a short only portfolio for Ranger Alternatives, L.P. which was later converted into the AdvisorShares Ranger Equity Bear ETF in 2011. Mr. Del Vecchio also launched an earnings quality index used for the Forensic Accounting ETF. He is the co-author of What's Behind the Numbers? A Guide to Exposing Financial Chicanery and Avoiding Huge Losses in Your Portfolio. Previously, he worked for renowned forensic accountant Dr. Howard Schilit, as well as short seller David Tice.