DIVERGE

Bad news folks, this rally does not pass the smell test as the DJIA goes to new highs, the SPX is up 7.5 and the NAZ is up 12. The problems, when you look at your mutual funds tonight, you will probably find they are losing the battle against the big cap indexes.

Today we have about 30 more losing issues than winners on the NAZ and about 400 more winners than losers on the NYSE. That is not what one would call a broad based rally. Also, the up/down volume on the NYSE is equal and the TRIN on the NYSE is 1.2- One doesn't expect these readings when the DJIA and the SPX are trading up like they are today.

The banks and the brokers are leading the way with each higher by about 1%. GS is up almost $3, MER is up $1.5 while all the major banking issues such as JPM and C are also higher.

On the DJIA, the only issues in red are AA XOM HPQ MO and GM.

I don't know how long the divergence can last but I do know that I have sold the last of my DJIA YM futures as divergences like this do not last forever.