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While the exploration of the various catalysts that might trigger the next bear market in stocks is certainly an important endeavor, the near-term action in the stock market is fascinating to say the least at the present time. Thus, we will cross our fingers and hope that the bears can be held off one more day, as the goings on in the stock market demands some analysis this morning. (And we promise to return to our list of Bear Market catalysts on Friday).

In case you don't spend your days pouring over charts, excel spreadsheets full of indicators, and more market models than you can shake a stick at, there is a very large disconnect happening in the market currently. And since it is quite rare to see the degree of divergence that is occurring, it is worth devoting some time so as to understand what the heck is going on.

It's All Good, Right?

On the 25th anniversary of CNBC hitting the airwaves (time flies when you are having fun, right?) the Dow Jones Industrial Average closed at a fresh all-time high. Although you have to squint pretty hard to see it and check the closing number to be sure the DJIA actually did best the high of 16,573 on April 2, 2014, the new high appeared to be a fitting celebration.

DJIA Daily

However, before you run to the computer and check how much margin you've got available in your account, you may want to peruse the rest of the charts contained in this report. Because, contrary to the hoopla that filled the CNBC sets at yesterday's close, all is not well at the corner of Broad and Wall these days.

Okay, so Exhibit A is the chart of the DJIA above. While it is REALLY hard to see that the venerable index did indeed finish at a new all-time high on Wednesday, it is also hard to be overly negative with that type of price action.

So, let's move on. Exhibit B is the chart of the S&P 500 shown below.

S&P 500 Daily

To be honest, the chart of the S&P looks pretty good as well. The bulls will argue that the index broke out of the wedge formation that has been forming during April. And since most consolidations are resolved in the direction the index was heading before the consolidation began, it isn't too terribly surprising to see an upside breakout here.

However, the bears will counter with the idea that the so-called breakout left a lot to be desired. The S&P didn't exactly exhibit jailbreak characteristics and when looking at the internals, the move didn't really have any oomph behind it. Thus, our furry friends contend that with the resistance overhead, the breakout could very well turn into a "fake out" at the drop of an algo.

But Wait, There's More...

While it could be argued that the current debate by the opposing teams is merely the usual banter, the folks donned in their "Da Bears" hats have a couple other charts to show you here.

Take a gander at the chart below. This is the iShares Russell 2000 ETF - or the IWM - on a daily basis.

iShares Russell 2000 ETF (IWM) Daily

Take a moment and compare the action of the IWM to the S&P and DJIA from March through yesterday. The Dow looks to be moving higher in a choppy fashion. The S&P appears to be going largely sideways. And the IWM? Well, that's a horse of a different color.

Yes fans, that's what a downtrend looks like.

It is also worth noting that there are what looks like two fairly important lines in the sand - here and at about $100 on the IWM.

So... if the Russell doesn't turn around in a big hurry, it would appear that the small caps could be in big trouble in the event of further weakness.

But wait, there's more...

Global X Social Media Index (SOCL) Daily

The cause of the disconnect between the "generals" (the DJIA and S&P 500) and the "troops" has been the rather enthusiastic sell-off seen in the former momentum names. The chart of the Global X Social Media ETF makes this point perfectly clear.

While the Dow and S&P have waffled around a bit since the beginning of March, the social media names have been crushed. Yes, we've talked about this before. However, as the saying goes, sometimes a picture is worth a thousand words.

The Question of the Day

So, the question of the day is if the blue chip indices can really continue movin' on up when there is so much destruction going on in the former leaders such as Netflix (NFLX), LinkedIn (LNKD), Amazon.com (AMZN), Pandora (P), Yelp (YELP), Twitter (NYSE:TWTR) (YIKES!), and some company called Gogo, Inc. (GOGO).

On the one hand, it is worth remembering that in the 2000-02 "tech bubble bear" the broad market in general, and value stocks in particular, didn't do too badly. No, it was the high fliers that were wiped off the face of the earth, while the broad market hung in there pretty well.

However, unlike today, the broad market had struggled during the big technology boom of 1999. So, it might be hard to argue that this is a perfect corollary. But, the point is that there have been times in history where the mo-mo names were beaten unmercifully while the broader market was not.

Will that be the case here? So far, so good, the bulls argue. But at least from my perch, this appears to be the most important question of the day. Therefore, the action during the "Sell in May and go away" will be very important. Stay tuned!

The focus of the market would appear to be squarely on the Federal Reserve at the moment. And with the Fed not providing any surprises at yesterday's FOMC meeting, traders remain modestly upbeat. Overnight markets are a tough read as Hong Kong, Shanghai, Germany, and France are all closed for various holidays. Here in the U.S. futures are trading flat-to slightly higher at the open.

Pre-Game Indicators

Here are the Pre-Market indicators we review each morning before the opening bell...

Major Foreign Markets:

- Japan: +1.26%

- Hong Kong: closed

- Shanghai: closed

- London: +0.21%

- Germany: closed

- France: closed

- Italy: -0.88%

- Spain: -0.02%

Crude Oil Futures: -$0.76 to $98.98

Gold: -$11.90 at $1284.00

Dollar: lower against the yen, euro and pound

10-Year Bond Yield: Currently trading lower at 2.658%

Stock Futures Ahead of Open in U.S. (relative to fair value):

- S&P 500: -0.10

- Dow Jones Industrial Average: -5

- NASDAQ Composite: +7.44

Thought For The Day... Kind words can be short and easy to speak, but their echoes are truly endless. -Mother Theresa

Positions in stocks mentioned: none

Source: Daily State Of The Markets: The Question Of The Day Is...