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The Prime Wave is a free weekly publication intended for active traders and those interested to learn more about trading. If this has been forwarded to you, you can subscribe here to continue receiving the newsletter.
NOTE: The Prime Wave will be taking a holiday break next week. The newsletter will be back on Monday, January 5th. As ECB president Christine Lagarde said last week “Merry Christmas, Happy Holidays - whatever is convenient to those of you who celebrate or don’t celebrate.”
THE BIG IDEA
In last week’s Numbers Only section, we pointed out that the S&P 500 had recently notched its highest number of 52-week highs since back in the summer.
Also on that same day, both the S&P 500 and its equal-weighted cousin closed at all-time highs after a choppy 6-week consolidation period following the previous all-time high. The experts on the internets were right there to point it out. One active publisher remarked about the “clean” breakout that had just occurred.
A well-known asset manager wrote “S&P 500 Equal Weight hitting fresh highs confirms this isn't just a mega-cap story. When the average stock participates, the floor rises.”
Another famous analyst forgot to add the <sarcasm> tag to his snarky post: “Market breadth is so weak, and there are so few stocks working in this market, that the NYSE Advance-Decline line closed at a new all-time high yesterday.”
They all were looking forward to the glory and pleasure of the next step higher for the stock market that was obviously underway.
And then the S&P 500 fell by 2.6% in four days.
As of now, the index is still down for the month of December.
This is where it helps to have an unthinking indicator to provide a second opinion. On the fateful day of those all-time highs, the Swingex Index was at a very pessimistic -5. Swingy’s commentary that day was “Some stocks flying, some stocks sinking. The index says gravity will win.”
Our dumb index is not always right. Clearly, neither are the experts.
There is nothing wrong with paying attention to what the analysts on ”fintwit” are saying. There are alot of experienced, insightful people out there. Still, there is something to be gained from marrying subjective analysis with an automated indicator, whether it is ours or some other useful tool you have found.
BTW, if you have not been following along from day to day, the Swingex Index has been above zero only once all month. That was on the 17th when the market hit bottom (so far?).
SEEN ON THE INTERNETS
Somebody known as WallStJesus on the Stocktwits website posted the chart seen below.
For years, technology related stocks and non-tech stocks more or less traveled together in terms of profitability. That all changed after the Great Financial Crisis. Now all the money is in tech.
This goes a long way in explaining how the shares of an obscure software company back in 2009 called Microsoft could have increased in value by 34X since then.
It also explains how The Aluminum Company of America (a.k.a. Alcoa) could currently have a market value of $13 billion, while something called Datadog is worth $45 billion.
Will the current trend continue? Will the era of tech profitability come to an end? If so, when?
NUMBERS ONLY
4 | The Dow Jones Transportation Average is on a 4-week winning streak. Try to find another well-known index that can match it. |
$855.62 | Shares of once rock-solid Costco (COST) had their lowest closing price of the year on Friday at $855.62. The stock is down 6.1% for the year so far. |
$7.1 trillion | Friday’s batch of expiring options involved an estimated $7.1 trillion in notional value across stock options, index options, and single-stock futures. |
SWINGEX INDEX
As of market close on: 19 December 2025
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Swingy says: Don't do any holiday shopping at the stock market. Buy a good book and start studying for next year.
Learn more about how the Swingex Index works here.
WATCHER
Stocks highlighted here each week are not recommendations to buy or sell. They are provided as ideas for swing traders to follow up on with their own research.
RKT (Rocket Companies): What Rocket Companies does is not actually rocket science. They are in the mortgage finance business.
What we like about this chart is the classical cup-and-handle pattern that started to be traced out back in September. As often happens with a good cup-and-handle, the right side of the cup doesn’t quite make it back to the height of the left side. Also typical, trading volume really dried up during the “handle” period.
A traditional interpretation of the chart would suggest a price of $25.50 for the next leg up in the stock’s journey, based on the depth of the cup as measured on the right-hand-side.
This may play out over a longer period than our usual 3-week look ahead. But it is a time-tested setup that should work unless the market completely falls apart in the new year.