Through the end of last week, U.S. Equities were off to a furious and fast start to 2026, leading to an uptick in participation when examining the bullish percent indicators on the platform. While Tuesday’s (1/20) action may have an impact on recent increases in participation, we have already seen many of those indicators reach notable inflection points. One of the best ways to visualize participation and movement within technical indicators is through the Distribution Curves located under the Allocation Tab.

Utilizing the normal distribution curve from statistics that many are familiar with, NDW users can monitor indicator movements over time and identify areas of high or improving participation as well as areas of low or deteriorating participation. While there are distribution curves for a few different universes as well as a variety of indicators ranging from short to long-term, today’s piece will focus on recent action within the NDW 40 sectors’ bullish percents (BPs), which measure the percentage of stocks that maintain a buy signal on their default point and figure chart.

As of Friday’s (1/16) close, 30 of the NDW 40 sectors BPs maintain a column of Xs, indicating sectors that have seen increases in stocks maintaining buy signals. While the distribution curve can and has been skewed, the current market environment presents a fairly normal distribution with leadership coming from sectors/industries like Banks and Aerospace, along with the broader Industrials and Materials sectors. While users can identify leaders and laggards from the current lay of the land, so to speak, graphing the average BP reading from the NDW 40 sectors on a point and figure chart reveals an intriguing point.

After moving above 50% on the point and figure chart toward the end of last week, the average reading has reached its high mark from recent years, with the last visits coming in July 2025 and November 2024. It is worth noting that the average reading for the NDW 40 BPs hasn’t moved into the lower to mid-50% range since 2023 and hasn’t been above 60% since 2021. While this highlights that concentrated, cap-weighted tilt that market has maintained, it is also the longest streak between trips above 60% for the ^BPAVG indicator. Based on calendar days, the current streak is more than 600 days longer than the second longest streak between trips above 60% that persisted for more than 1000 calendar days from May 1998 to May 2001.

This chart is not only helpful in explaining the concentrated nature of the equity market to clients, but more importantly, a breakout above recent years’ high mark around 50% would be an actionable point for investors to understand that the market’s dynamics are changing. NDW users can utilize the alerts systems for not only reversals on the chart but moves above or below certain thresholds by clicking on the Clock Icon in the upper left-hand corners next to the chart’s main header.

Momentum strategies have been off to a great start through the first half of January. The iShares MSCI USA Momentum Factor ETF (MTUM) has outpaced the S&P 500 Index (SPX) by 1.84% through January 16th. In fact, this is the third year in a row that MTUM has outperformed SPX in the first half of January. While the first half of January is a relatively short time frame, it does seem to indicate whether MTUM or SPX will win out the rest of the year. Going back to 1993, the winner of the first half of January went on to outperform on an annual basis nearly 75% of the time. Therefore, a strong start by momentum is usually a positive sign that the rest of the year will be a good one on a relative basis. Over the last decade, the winner of the first two weeks of January went on to have the better year eight out of ten times and has been correct the last four years (2022 – 2025). MTUM has beaten SPX in the first half of January the last three years (2024 – 2026). While basing investment decisions purely on the first two weeks of January would be ill-advised, the historical tendencies point to backing the strong horse even if it is just out of the gate.

Looking elsewhere, momentum stiffened back up after cooling off at the end of 2025. The RS Spread Index (RSSPREAD) tested its positive trend line in December but has since reversed higher and is one box away from marking a new all-time high. For those unfamiliar, RSSPREAD tracks the dispersion between a basket of high momentum stocks versus a basket of low momentum stocks. If the indicator is moving higher, then high momentum stocks are outperforming low momentum stocks, an ideal environment for any momentum or trend following strategy. RSSPREAD has been in a positive trend since early 2024, and despite some rough patches, continued to push higher in 2025.

There is plenty of other positive evidence as well like MTUM having a fund score above 4.0 since January 2024 or the Percent Positive Trend for the S&P 500 (^PTSPX) being above 50%. Until we start to see the evidence change, the domestic equity market is in a supportive environment, especially for momentum and relative strength strategies. With the strong start to the year, it’s usually a good idea to stick with the best horse until proven otherwise.  

Daily Option Ideas for January 20, 2026