Margin Balances Decline, Market Advances?

If you would have told me that NYSE margin debt would be down >5% month-over-month March to April, I would have guessed that the market would be down by at least that much.

However, using end of month data the S&P (the proxy I'll use for "the market") is up by almost 5%. How to explain this curious decoupling of margin debt and market cap? Follow this link to see margin figures from the NYSE site.

I haven't read or heard anything saying that either the Fed has raised margin requirements or that brokerage firms are making it harder for their customers to access margins. I've seen some articles which suggest anecdotally that hedge funds are dialing back their margin levels but I'm not sure whether hedgie margins are included in the NYSE data.

So, since I don't trade on margin, I'll have to ask those out there who do; is there something I've missed with regards to general margin availability other than what I described is happening in the hedge fund world? Also, I've seen articles such as this one that state that NYSE short interest as a % of shares outstanding is at record levels. Do shares sold short count towards the margin balances published by the NYSE?

So we're back to a level of absolute margin $'s that is 23% off the peak seen in July 2007 and that is the same as it was February 2007. This is either; a) an ominous sign of an imminent market decline or b) a promising sign that pent up demand is accumulating which will fuel this newest bull market. Or perhaps it's neither of the above; for example, it's simply a sign of a healthy destruction of debt cycle that is the medicine required to cure the most recent macroeconomic ills. Read this post for clues as to which answer I choose.