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THE BIG IDEA
After a long stretch of being at or near zero, the Swingex Index has perked up to a robust +7. Let’s look at what it means, and doesn’t mean, for the coming days.
First of all, how did we get here? Swingy is the keeper of the Swingex Index and he does not like to divulge the formula. The most we can get him to tell us is that it is not some AI-generated hocus-pocus. What we do know is that there was a stealth wipeout in the stock market towards the end of last week. On Friday, 62 members of the S&P 500 were down by 3% or more. OTOH, there was no obvious crack in the economy. We keep an eye on the junk bond market for signs of trouble, and those bonds were flat on Friday.
Now, back to the Swingex Index. It was built to tell us what conditions will generally be like over the next 3 days to 3 weeks. That can play out in numerous ways. The Index can give us the basic direction but not the specifics about when we get there.
The current +7 reading is quite bullish. What can we expect to happen now? There have been 34 previous +7s since the Index started back in April 2021. As a test, we compared the closing value of the S&P 500 that produced the +7 with the median closing price in that 3 day to 3 week window. In other words, the seventh highest close of that 13 day period.
Below is a summary of how things turned out.
Remember, by using the median closing price we are leaving plenty of opportunity to improve on these results. Maybe you have some way of exiting your trades that is better than random.
Still, there are no guarantees that a bullish value of the Index will lead to a higher stock market. As new information comes in, it could rain on our parade. Or something unforeseeable could knock the market down. And sometimes the Index just simply gets it wrong.
The last +7 occurred on April 21 this year and preceded a prolonged bull run. It might not happen this time, but history says you shouldn’t bet against it.
SEEN ON THE INTERNETS
A rare event happened last Thursday. The market - many different indexes - opened more than 1% above Wednesday’s close, but finished the day lower.
Fresh earnings reports from Microsoft and Meta Platforms (a.k.a. Facebook) triggered the gap up before profit-taking ensued. Both of these stocks are important members of the NASDAQ 100, one of those indexes that jumped up at the open.
Jason Goepfert posted on social media that QQQ (an ETF replicating the NASDAQ 100) has seen 8 previous times when it gapped up by more than 1% to reach a 52-week high only to finish the day lower.
It’s not a huge sample size, but it still can give us something interesting to chew on. The next few days may or may not turn out well. However, history is more bullish if we look 2-3 weeks into the future.
NUMBERS ONLY
49.8% | For the first time in three months, less than half of stocks in the S&P 500 are above their 50 day average. |
10 | Ten of the 11 official S&P market sectors were down last week. Only Utilities were up. |
$2.86 trillion | The total market cap of all publicly traded companies in Germany is $2.86 trillion. This is smaller than NVIDIA, Microsoft, or Apple. |
SWINGEX INDEX
Swingy says: It might not be straight up from here, but the Index is saying its time to grab and go. | As of market close on 1 August 2025+ 7 |  |
See some historical examples of the Swingex Index in action 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.
Nebius Group (NBIS): After forming a cup-and-handle back in the spring, NBIS has been holding in a tight range for the last two months. The most likely outcome is a continuation of the larger trend (i.e. another leg higher from here). But watch out for a false breakout that quickly changes direction!