October 22, 2025: A Simple Indictor of Market Strength and Direction

For example, in economics, the Purchasing Manager's Index (PMI) and unemployment rate are two key tools that are used by economists and market strategists.  

There is an ocean of indicators that are used in fundamental analysis.  The most popular are around growth, earnings and market value. The top indicators are earnings per share (EPS), price to earnings (P/E), and return on equity (ROE).

These two classes of analytics provide valuable information about consumers and companies, and by extension, the stock market.

However, these methods cannot pinpoint market weakness or strength.  They do, however, provide a background for investor concern or optimism. 

In the third method of analysis, which is technicals, analytical methods can be very subjective.  Similar to the first two classes of analysis, the tools and applications can be misleading and incomplete.

A simple indicator of market strength can be determined by monitoring the percentage of rising holdings versus the percentage of declining holdings.

In Chart 1 of the NYSE, the majority of the holdings are advancing.  Currently, 64.76% are rising and only 35.24% are declining.  Basically, 2/3rds are rising.  The bulls are in control.

In Chart 2 of the S&P 500,  there is similar strength.  66.60% are advancing.

The TSX is the leader in performance, with  82.71% rising and only 17.29% dropping (Chart 3).  This high percentage is very bullish.

Bottom line: When there is a prolonged percentage of over 60% majority advancing, the market does not decline.  When there is less than 40% rising, which means the majority (60%+) are declining, the markets pull back (ie boxed areas).  And when the percentage of advancing and declining is nearly equal, markets tend to trade flat.

We suggest investors use this simple indicator of the percentage of advancing versus declining stocks to determine market strength and direction.