What Will Drive Stocks Higher Now? Strategist Sees Bullish Fatigue Setting In

Since 2012, the S&P 500 has been on a mostly steady climb—an easy reason for investors to keep holding on. But recently, it’s not just that stocks are rising; it’s that sellers have all but vanished. And that, says Andrew Thrasher of Thrasher Analytics, could be a red flag.

In his latest research, Thrasher found that downside activity in the market has hit unusually low levels. “We’re not seeing much volume in declining stocks,” he told MarketWatch. “There’s no real capitulation or heavy selling happening—just relentless buying. That’s often a sign of overly bullish sentiment.”

His data shows that in early July, just 39% of trading volume came from declining stocks—well below the 42% threshold that has historically signaled a near-term pullback.

Similar setups preceded drops in 2020, 2019, and 2016. Now, that ratio has nudged higher to 44%, a sign that sellers may finally be stepping back in.

“We’re starting to see more downside volume, fewer new highs, and generally weaker participation from individual stocks,” Thrasher said. “It’s not falling apart—but it’s thinning out.”

Thrasher, who helps manage over $800 million at The Financial Enhancement Group, says the market still looks “structurally sound,” but he questions what catalyst could drive the next big move up. Lingering tariff risks and the potential for rising inflation could pressure consumers and shift market sentiment.

While he continues to focus on price action first and foremost, Thrasher warns that overly one-sided bullishness can’t last forever. “At extremes, the market becomes like a teeter-totter—too many people on one side, and it can’t move.”