Price Advance Narrows Into Month-End With Negative Divergences

1216.10, -.86 (-0.07%) and the
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SPY |
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PowerRating) +0.03% to 121.40. The initial

post-expiration move was down about 5 points to the intraday low of 1210.65 on

the 10:20 a.m. ET bar, and then it rallied to the 1219.10 intraday high by the

3:15 p.m. bar, closing at 1216.10. Suffice to say when the SPX traded down

early, the media (including TradingMarkets) said it was due to the spike in oil,

so if one believes that, then I guess the five straight up days last week for

the SPX were also due to a sharp increase in crude oil, which has been, in fact,

advancing for 19 days from the 48 level along with the advance in the SPX. The

Dow
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$INDU |
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PowerRating) was -0.01% to 10,609, the
(
QQQQ |
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PowerRating) flat at 37.87 and the

Nasdaq -2 points to 2088. NYSE volume dropped to 1.27 billion shares, with the

volume ratio neutral at 46 and breadth -642. Net net, the market action was less

than informative to say the least. The XAU, -1.6%, XLB, -1.0%, and XBD, -1.0%,

the initial SPY RST buy above 121.02, which ran to 121.84, setting up an RST

sell entry below 121.71, which traded down to the 121.40 close. These two trades

were a positive note on a post-expiration Monday. It certainly beats Friday’s

month-end as the Generals will mark-up prices if they can and some hedge funds

will front-run that process. The current SPX move has narrowed from about 1190

to Friday’s 1219.55 intraday high as the Generals focus on their major holdings

mark-up. Overall breadth has shown a negative divergence as the SPX has

advanced, which is not a positive right now. The S&P 500 concentration is

evident also by the Bullish Percent index ($BPSPX, stockcharts.com) which is 66,

while the Nasdaq ($BPCOMPQ) is just 45%. It’s the Generals right now, folks, not

the public. The tech rally has also been narrow with the NDX 100 ($BPNDX) only

55% as fewer stocks carry this index. At the end of 2004, it was just over 80%,

while the SPX was about 78%. Always look for divergences as price approaches a