After plummeting last October, the S&P 500 has continued to notch new highs. That’s the good news. The bad news is that fewer stocks are participating in the advance:

The percentage of S&P 500 stocks trading above their 200-day moving average decreased from 90% just prior to the October plunge and hasn’t returned to that level since. Today it’s hovering at 77%. To make matters worse, the number of stocks trading above their 50-day and 20-day moving average has steadily fallen.

This lack of participation is a strong sign that the market might be tested in the coming weeks. In other words, things could get ugly.