For the first time in a while, we’re seeing early participation signs that selling pressure is beginning to diminish from unusually bearish levels.
Investors have been thrown for a loop over the last several months, with volatility spiking as markets whipsawed up and down. During these moments of instability, having systematic guides to lean on can serve as one of the few sources of clarity. Among the most helpful tools for cutting through noise are participation indicators, which can identify when conditions are stretched and help gauge when those extremes may be coming to an end. And for the first time in a while, we’re seeing early signs that selling pressure is beginning to diminish from unusually bearish levels.
Among the first dominoes to fall when change is underway are the ten week indicators (TWs), measuring the percentage of stocks trading above their ten-week moving average. The ten week indicator for the S&P 500 (^TWSPX) reversed sharply lower to start March, falling to borderline washout territory below 20%. Action over the past week caused the indicator to reverse back into a column of Xs for the second time, signaling that selling pressure may be diminishing in the near term as stocks find firmer footing. However, given the sensitive nature of the ten-week indicator, it can be prone to false signals, so we often look to intermediate-term indicators to confirm movement in the TWs.
Among the most widely used intermediate-term indicators are the bullish percents (BPs), which measure the percentage of stocks in a universe trading on a PnF buy signal. Looking at the bullish percentage for S&P 500 stocks (^BPSPX), the indicator seesawed up as uncertainty grew before eventually plummeting to the mid-30s to end the quarter. For the time being, the indicator sits on the fringes of what is considered normal. A decline in the bullish percent is negative overall, but a move below 30% could indicate that the market has sold off too heavily.
To evaluate longer-term participation, NDW uses the positive trend indicators (PTs), measuring the percentage of stocks trading in a positive trend on their PnF chart. The positive trend percentage for the S&P 500 (^PTSPX) held steady throughout most of the quarter before dropping to levels near 50% in March. Most of the market’s gains occur when PTSPX is above 50%, making the market’s ability to maintain or improve upon current levels a crucial factor in whether we see a strong performance during the rest of 2026. That’s not to say a move below 50% would be a death sentence, but it would represent a broader risk‑off signal.
