NYSE Composite Average

Options expiration is coming next week. Trading leading up to and during expiration dates tend to push to the extremes. As a result, technical interpretations during these windows can be quite difficult. Retail money can get confused by the technicals caused by the confluence of expiration flows.

As the equity trees continue to reach endlessly higher into the sky, caution is still warranted. A few days ago I pointed out that the NYSE put/call ratio was 0.67. As of yesterday's close, the number has dropped to 0.61. This means for every put traded, there were 1.64 calls traded. This low number, which can push below 0.5, reflects the equity trees pushing higher into the sky. This is a warning flag.

In addition, the energy of the tape since February has been anemic. An indicator called REV(E), cumulative measure of energy behind the tape, illustrates the divergence of price with the October and January highs. Today's REV reading lags behind not only the January but also October high. This serial, double divergence with price and tape energy is troublesome. The single divergence foreshadowed the equity correction in January. Skepticism towards price must reign as long as these divergences exist.

NYSE Composite with Exchange Volume: