We review the major participation indicators for the S&P 500 and their movement in Q2.
The participation picture for the market looked bleak at the start of the April, and while most indicators rebounded throughout the quarter, things got significantly worse before they improved. The ten week for the S&P 500 (^TWSPX) gauges near-term participation, and the indicator sat at 39% entering Q2, but market selloff after “Liberation Day” saw TWSPX fall as low as 5%. However, the market’s rally following the initial selloff saw a rapid rise in participation, getting as high as 78% earlier this week. Wednesday’s action saw the indicator fall five percentage points, leaving it in position to potentially reverse right below 80% for the the third time in the last several weeks.
Movement within TWSPX is often confirmed by the more intermediate-term bullish percent for SPX (^BPSPX), which started off at 40% entering Q2. Things bottomed out around 14% to begin the quarter, following the movement of the broader market and mirroring the decline of TWSPX. With equities quickly rebounding, we saw a massive upswing for BPSPX as high as 74% before reversing lower to its current position just below 70%. While both the ten week and bullish percent may have trouble moving higher from our current levels, that isn’t necessarily a bad thing, as the indicators could fall without a decline in the market given some consolidation. The S&P 500 has an overbought/oversold reading north of 80%, placing us in relatively overextended territory, meaning it could be healthy for the market to see some slowdown or consolidation in the near-term.
The positive trend percentage for the S&P 500 (^PTSPX) gauges long-term participation and is often used to confirm movement within the bullish percent. While PTSPX didn’t move as low as shorter-term indicators, it still saw a decline and subsequent rally above its initial 51% entering Q2. The metric hit a low of 32% during the peak of investor’s tariff fears before lifting off to its current levels around 70%. The majority of the market’s gains come when the PTSPX is above 50%, and readings north of 60% are even more positive, placing us in strong territory.
Given that all three major indicators for SPX paint a generally positive picture for participation, large caps are set up well for the second half of the year. That said, the market’s ability to maintain current participation levels will be a crucial factor in whether we see a strong close to 2025, making our Technical Indicator Report a crucial page to watch in the coming months.
