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- Horseshoes And Hand Grenades
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
You probably need to be over age 40 to understand the saying that “close only counts in horseshoes and hand grenades”. We are not going to teach you the rules for the game of horseshoes so TL/DR you can score points for getting your horseshoe near the target even if it was not a direct hit. It is the same for throwing a hand grenade, of course.
This not-so-naturally brings us to the NAAIM exposure index. Every week, NAAIM (National Association of Active Investment Managers) surveys its members about how invested they are in the stock market.
These funds are more likely than the rest of us to use leverage and/or have short positions. That means they can be more than 100% invested or, in theory at least, be “negative” invested if they are short more than they are long.
You might expect that the professional fund managers would do better than the Average Joe of buying low and selling high. But that would be giving them too much credit.
Look at the charts below. Notice how the ups and downs of the stock market line up with the value of the NAAIM index.
Both charts from NAAIM website
As a rule of thumb, when the NAAIM exposure index goes over 100 it is a warning of trouble ahead for the stock market. The latest reading was 99.30. Is that close enough? There is nothing magical that happens at exactly 100. It’s just a convenient round number.
Towards the end of last year, the index twice came tantalizingly close to breaking the 100 barrier (98.93 and 99.24) and the market chopped sideways for a couple of months. So “close” may be “close enough” to influence your trading decisions even if it is not a smoking gun SELL! signal.
SEEN ON THE INTERNETS
For the July 4th weekend we have a post from Charlie Bilello showing in graphic detail how the U.S. equity market has done much, much better than the rest of the world. This is not exactly secret information, but it is startling to see.
That’s a 592% gain for the U.S. versus 140% for everyone else.
To understand the reason for it, we highly recommend reading the work of an Englishman. Marc Rubinstein writes the Net Interest newsletter and, for the holiday, wrote Ode To America and made it publicly available. It is an entertaining and on-point personal history of his connection to the U.S. capital market.
NUMBERS ONLY
6 | The S&P 500 has made 6 new all-time highs so far in 2025. |
23655.25 | The S&P 500 High Beta Index likewise made a new all-time high on Friday. It is up 13.1% for the year. |
- 6.36% | Consumer Discretionary stocks have lagged Consumer Staples by 6.36% YTD. Usually a sign of a weak market, but not this year. |
SWINGEX INDEX
Swingy says: Be careful out there! I read somewhere that the market is making new highs, but the index says danger is lurking. | As of market close on 3 July 2025- 5 |  |
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.
$AA ( ▼ 0.19% ) - On June 17th we highlighted a boring old industrial stock, Alcoa. It had been prodding a resistance area around $29.50 and looked primed to finally push through it. It finally happened last week and is now at $31.15.