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- Are Stocks Going Up, Or Not?
This is the weekly version of The Prime Wave. The weekly is free for all subscribers, daily updates of the Swingex Index are reserved for paid subscribers only.
THE BIG IDEA
We read in the newspapers that the stock market made another all-time high on Thursday. It would be nice, if true. Somehow it doesn’t seem right.
In the chart below, we have the S&P 500 together with its Advance-Decline line. When the line is going up, it means more stocks are going up than are going down, and vice-versa.
You can see how, for the last several weeks, the stock market has been drifting higher while the A-D line is chopping sideways at best.
This is easy to understand when you realize that the most valuable company ($4 trillion!) in the U.S., NVIDIA, is up 9.1% so far in July. It can cover for 40 small $100 billion companies like Starbucks.
So is “the stock market” going up, or is it only $NVDA ( ▼ 0.86% ) that is going up? Let’s see what some other indexes have to say.
Index | Recent high | Drawdown from high |
|---|---|---|
S&P 500 | July 17 | -0.01% |
S&P 500 Equal Weighted | July 10 | -0.9% |
Dow Jones Industrial Avg | July 3 | -1.1% |
Value Line Arithmetic | July 10 | -1.4% |
Value Line Geometric | July 10 | -1.5% |
Russell 2000 | July 10 | -1.1% |
There you have it. Many other indexes of “the stock market” actually peaked earlier this month and have been a little soft since then.
What happens next? One school of thought is that once the Magnificent 7 stocks like $NVDA ( ▼ 0.86% ) run out of steam there will be nothing left to prop up the market. Then we’ll see a big drop in every index.
An alternative view is that when the inevitable profit-taking comes for NVDA that money will be re-allocated into the Starbuckses of the world. Then the opposite of what we have described above will occur.
Or both can happen. Profit-taking first, and then re-allocation. The Swingex Index is still pointing to some continuing weakness ahead. For the time being, it seems best to keep a low profile and wait for better times.
SEEN ON THE INTERNETS
We recently came across an article posted on the Stock Charts website that looked unusual, in a good way.
We are all guilty of too often forming binary yes/no or up/down or bullish/bearish opinions about the stock market. We don’t see a range of possible outcomes or any shades of grey between black and white.
What David Keller did in What Happens Next for the S&P 500? Pick Your Path! is consider the likelihood of different outcomes for the S&P 500 from now to late August.
You can read his post and watch the accompanying video to get the details behind his analysis.
Spoiler alert: In the end, he assigns the highest probability to a “mildly bearish” scenario.
NUMBERS ONLY
59 | The S&P 500 has closed above its 20-day average for 59 days in a row and counting. |
0.3% | Befitting a market moving sideways, the latest AAII sentiment survey found 0.3% more bulls than bears (39.3% to 39.0%). |
453 | The S&P 500 went down by 0.4% last Tuesday, but under the surface it was a wipeout - 453 of 500 stocks were lower. |
SWINGEX INDEX
Swingy says: More negative numbers. The Index keeps telling us there is something out there to be afraid of. Be careful! | As of market close on 18 July 2025- 2 |  |
See some historical examples of the Swingex Index in action here.
REWIND
Along with the daily value of the Swingex Index, we sometimes highlight stocks that could do well over the next 3 days to 3 weeks. This is a look back to 2-3 weeks ago to see how they have played out.
$SPY ( ▼ 0.23% ) $SPXL ( ▼ 0.73% ) - The first few days of July are seasonally bullish and so we were on a quick 3-day trade. Just buy the index or even a leveraged ETF version of it. That was good for a 1.5% gain from the open on July 1 to the close on July 3, or more if you went with a leveraged option.