Early action Thursday refocused market participants on the overwhelming ability of one stock to drive the rest of the market higher…. Before giving those advances up as we moved through the day. While nothing specific was cited for the fall-off, the move serves as a reminder that more often than not, participation from more than one name is needed to garner a healthy move in one direction or the next. Lots of recent research has focused on the drop-off of coordinated upside participation as we moved out of the Summer- and recent action leaves one of NDW’s flagship indicators with a notable reversal.

If you have read your fair share of NDW reports over the years, you will have undoubtedly heard of the Percent Positive Trend for the NYSE, which measures the percentage of NYSE listed stocks trading in a positive trend. The indicator serves as a gauge of long term strength of many different areas of the market, including those small and mid cap representatives that wouldn’t be captured via the S&P 500. All this to say, keeping tabs on this indicator can help us cut through the noise- noise that undoubtedly comes with a near 3% reversal for broad markets intra-day. Point being, this indicator reversed lower with action earlier this week, signaling a drop off in long-term participation. In plain terms, now just half of NYSE listed stocks trade in a positive trend… a metric lower than the first chart action in 2025.

Unlike traditional PnF charts, identifying support and resistance levels on market participation charts isn’t as important as identifying what part of the playing field we sit on. With that in mind, the analyst team updated our forward performance table following ^PTNYSE reversals across the broad, with the “average” reversal around current levels highlighted for convenience. You’ll note that intermediate to long-term returns are average-above average… but near term results do leave some room for chop. What we will want to see markets avoid is entering “no-man’s land” between ~20-40%, which is where average forward returns drop off significantly. All this to say, the reversal isn’t cause for concern yet, but a further grind lower without a significant washout event could bode poorly for major markets as we move into 2026. The other favorable option would be a resurgence of participation as we attack all-time highs again. Regardless of which way things head, we will continue to watch the charts to determine where we want to be as we move through Q4.

• Lagging money managers who fear for their jobs will cut their losses in small-cap stocks and invest in blue chips to avoid ending the year at the bottom of the performance rankings. They will then look to re-establish their aggressive positions in January, thereby helping fuel small stocks on a relative basis.
• The lower the institutional ownership of the stock, the greater the January effect, suggesting that individual trading is most responsible for the effect. This makes sense as taxes have a greater impact on individual investors than institutions.
• The years most likely to experience a pronounced effect are those preceded by large losses in the prior year, suggesting tax-loss selling is a key driver to this effect.
• The effect tends to be greater when the US dollar is strong, and weaker when the dollar is declining.
• Year-end bonuses, distributions, and gifts may go into the market, providing a boost in demand early in the year, the major effect coming from corporate retirement plans.
• Money managers are more likely to place riskier bets at the beginning of the year but bring their portfolios closer into alignment with the S&P 500 as the year progresses to protect themselves from any major deviation from their bogey late in the year. Risk tolerance is typically relaxed at the very end of the year, and more so into early January.

Daily Option Ideas for November 20, 2025