MW The stock market has been running low on investors who want to sell. That might be starting to shift.

By Barbara Kollmeyer

Strategist says it's difficult to see what will drive the next leg higher for stocks

Looking at chart of the S&P 500 since 2012, it might seem obvious why investors would be holding on to their stocks. Stocks have been grinding higher the past decade or so, barring a handful of pullbacks.

And as investors have continued to shrug off tariffs and economic worries into the summer, it seems sellers have also been scarce. That's according to our call of the day from Thrasher Analytics' founder Andrew Thrasher, whose research shows the level of stock selling has been flirting with dangerously low levels.

Earlier this month, Thrasher published a study and found little activity on stocks that are declining in value.

"What the study found was when we start seeing very little volume on downside stocks, we're not seeing really a lot of capitulatory-type selling, we're not really seeing any heavy selling at all. That's likely warranted toward sentiment that all the focus is just on buying and moving stocks higher," he told MarketWatch in an interview.

So hardly any stocks are moving lower, and those that are aren't seeing much volume, which can turn into a "sign of excessive bullishness," Thrasher said. At extremes, it turns into a sort-of "teeter-totter where you have too many people on one side, and it just can't move," he said.

His chart shows that in early July, trading volume for declining stocks dropped to 39% of all turnover. In the past, when that figure starts to move back above 42%, it has led to pullbacks -- albeit short and fast -- such as a 7.5% drop in September 2020, a 5% drop in 2019 and a 5% drop in 2016. The uptrend through 2024 never saw that ratio get below 40%, he said.

More recently though, that ratio has inched back up to 44%, meaning sellers may be starting to show up, said Thrasher.

"We are starting to see more downside volume flowing into stocks, which does line up with a lot of other breadth data. We are starting to see less new highs, we are starting to see not as much participation in this market in the last probably two or so weeks of most stocks," he said.

Thrasher, who also helps manage over $800 million for high net-worth clients as portfolio manager at The Financial Enhancement Group, said while the stock market still looks "structurally sound," it's tough to see what will bring about the next leg up, because of the "unknown impact of additional tariff announcements."

Thrasher, who said he ultimately pays attention to price action above all, suggests investors should also watch out for inflation moving up, as that will put pressure on the consumer and turn into a long-term negative. "We are watching inflation and we are watching the labor market, but so far those aren't quite alarming yet," he said.

Read: Volatility suggests AI is not in a bubble - at least not yet, says Bank of America

The markets

Stock futures (ES00) (YM00) (NQ00) are drifting lower, a day after fresh records for the S&P 500 SPX and Nasdaq COMP, with Treasury yields BX:TMUBMUSD10Y BX:TMUBMUSD30Y are inching up. Oil prices (CL00) (BRN00) are falling.

   Key asset performance                                                Last       5d      1m      YTD     1y 
   S&P 500                                                              6305.6     0.59%   4.65%   7.21%   13.32% 
   Nasdaq Composite                                                     20,974.17  1.62%   6.84%   8.61%   16.47% 
   10-year Treasury                                                     4.384      -10.40  8.80    -19.20  12.90 
   Gold                                                                 3399.6     1.42%   0.45%   28.81%  41.76% 
   Oil                                                                  65.43      -2.09%  -2.66%  -8.96%  -16.37% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

Fed Chairman Jerome Powell will make opening remarks at a banking conference at 8:30 a.m.

General Motors (GM), Coca-Cola (KO) and Lockheed Martin (LMT) are among the companies reporting results, with GM earnings and revenue topping analyst expectations.

Texas Instruments (TXN) will report after the close.

Drawing praise from the Trump administration, AstraZeneca $(AZN)$ (UK:AZ) said it would invest around $50 billion in the U.S. over five years

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The chart

The Bank of Canada's just-published second-quarter survey of consumer expectations featured a new question on U.S. spending intentions by Canadians in light of trade tension with its neighbor. The chart shows more than half plan to cut spending on U.S. goods and vacations in that country, and one third will boost spending on Canadian vacations due to the trade conflict.

Top tickers

These were the most active tickers on MarketWatch as of 6 a.m.:

   Ticker  Security name 
   NVDA    Nvidia 
   TSLA    Tesla 
   OPEN    Opendoor Technologies 
   GME     GameStop 
   PLTR    Palantir Technologies 
   NIO     NIO 
   AAPL    Apple 
   TSM     Taiwan Semiconductor Manufacturing 
   PLUS    EPlus 
   AMZN    Amazon 

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-Barbara Kollmeyer

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July 22, 2025 06:49 ET (10:49 GMT)

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