Profunds index and sector trading

[Vestor_2000]

S&P 500 Bullish Percent ($BPSPX)

This is one of the breadth indicators I track as part of my IT work.

Back in May, when the market hit 1326, the BPI touched about 67.4. This was down from 73.4 in early January, when the S&P 500 stood at about 1280 or so. This negative divergence served as a warning shot for what was to come.

Last week, the S&P 500 hit a high of 1315, just 11 points shy of the May high. Close enough for government work. Yet, the BPI hit a high as of Monday's close at 57.8; the BPI ended the week at 57. This 10 point difference means about 50 fewer companies are on their PnF buy signals, which makes for poor market breadth.

Given seasonality, the market's poor track record around Triple Witching, etc., I would say this market is beginning to develop some things to watch carefully. We saw another in the COT report on Friday. I'm not saying this market can't rally a bit more, but with fewer and fewer stocks participating, at least in the S&P 500 per the BPI, I'd be careful about trying to eek out another percent or two.

Any thoughts from the board?

Have a good evening everyone.