Price and Sentiment Diverge: Three Uncommon Buying Indicators Appear

Taking Advantage When Fear Dominates the Market

Significant market bottoms are often characterized by intense volatility, widespread pessimism among investors, and weak market participation. Recent examples include the dramatic downturns during the ‘Liberation Day’ and COVID-19 bear markets, both marked by sharp volatility spikes and overwhelming negativity. Occasionally, however, these extreme technical and sentiment signals can appear even when the S&P 500 and other major indices remain close to their record highs. That’s exactly the situation we’re witnessing now: despite the S&P 500 and Nasdaq being less than 6% below their peaks, investor anxiety is running high. Here are three notable indicators suggesting a market rebound may be near.

McClellan Oscillator Shows Deep Oversold Conditions

Market breadth, which measures the level of participation in market moves, can reveal when selling pressure has reached an extreme. When advancing stocks become scarce, it often indicates panic selling is nearly exhausted. The McClellan Oscillator tracks the net difference between advancing and declining stocks on the NYSE or S&P 500. According to Subu Trade (@SubuTrade), “even though the S&P 500 is within 5% of its all-time high, the McClellan Oscillator is extremely oversold. Historically, this scenario has occurred ten times before, and each time the S&P 500 was higher a month later, averaging a 3.2% gain.”

Source: @subutrade

Just yesterday, the NYSE McClellan Oscillator dropped to its lowest point since the ‘Liberation Day’ bottom in April 2025.

Source: StockCharts.com

Fear & Greed Index Signals “Extreme Fear”

The CNN Fear & Greed Index aggregates seven different metrics to assess investor sentiment, including market momentum, stock price strength and breadth, options activity, junk bond appetite, volatility, and demand for safe assets. Despite only a mild pullback in stocks, the index has registered its first “Extreme Fear” reading of 2026.

Source: CNN

Active Investors’ Market Exposure Hits Multi-Year Lows

The National Association of Active Investment Managers (NAAIM) survey reflects the average equity exposure reported by its members. Recently, this measure fell to its lowest level since May 2025, indicating that professional investors have become extremely cautious.

Source: NAAIM

Where Are the Opportunities?

These indicators point to a likely continuation of the market’s upward trend. Investors may want to focus on stocks that have demonstrated resilience during the recent downturn. In particular, companies involved in AI infrastructure have shown strong fundamentals and technical performance. Notable names in this space include Nebius (NBIS), IREN (IREN), Sandisk (SNDK), Micron (MU), and Bloom Energy (BE).

Key Takeaway

History shows that the best buying opportunities often arise when technical indicators are stretched to extremes and investor sentiment is overwhelmingly negative. With both breadth and sentiment measures at such levels, now is a critical time for investors to stay alert.

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