We are going to take a look at a daily chart of the S&P 500, but only to show you something important you wouldn't have seen otherwise. That's the Arms Index, or TRIN Index, for the NYSE compared to the S&P 500. More specifically, we're comparing the S&P 500 to a moving average of the Arms Index.

The Q&D version of why the TRIN's moving average matters: The indicator is a comparison of the market's breadth (advancer versus decliners) to it depth (up volume versus down volume). As long as the two are balanced, the current market trend should remain in place and the TRIN's moving average line should be holding steady somewhere around 1.0. If things start to become imbalanced between breadth and depth though, that often means convictions are changing. That usually corresponds with a change in direction of the Arms Index. As you can see on the bottom half of the chart below, the TRIN Index fell to a multi-month low in November, and even though the S&P 500 itself has continued to rise, the Arms Index has started to rise as well. This isn't what the bulls want to see, as it suggests the volume behind the rally is waning even if breadth, or participation, isn't doing the same.

S&P 500 Daily Chart, with NYSE Arms Index/TRIN Moving Average

Source: TradeNavigator

It's too soon to sound the alarm bells based on the Arms Index trend just yet. But, after more than a couple of months of upward traction, it's not too soon to wonder if things aren't exactly as bullish as they seem on the surface. That's especially the case given how overbought the broad market is at this time.