Strategist Warns: Hard to See What Pushes Stocks Higher from Here
Looking at the S&P 500’s steady climb since 2012, it’s easy to see why investors remain bullish. Despite a few notable pullbacks, the market has mostly marched upward—and recently, sellers seem all but absent.
That’s the key takeaway from Andrew Thrasher, founder of Thrasher Analytics, in our Call of the Day. His recent research shows stock selling has dropped to unusually low levels—a potential warning sign of excessive optimism.
In a study published earlier this month, Thrasher observed that very few stocks are declining, and those that are see little trading activity. “We’re not seeing capitulatory or heavy selling. The focus is entirely on buying,” he told MarketWatch. “That imbalance can create a teeter-totter effect—too much weight on one side, and the market struggles to move higher.”
In early July, declining volume made up just 39% of total trading, compared to the 42%+ threshold that has historically preceded quick market pullbacks—such as in September 2020 (-7.5%), 2019 (-5%), and 2016 (-5%). That ratio has since ticked back up to 44%, suggesting some sellers may be returning.
“We’re starting to see more downside volume and weaker participation,” Thrasher said, noting a drop in new highs and breadth over the past two weeks.
While he still views the market as “structurally sound,” Thrasher is cautious about what could spark the next rally leg. Tariff uncertainty, in particular, clouds the outlook. He’s also keeping a close eye on inflation and labor data—two potential headwinds that, if they worsen, could weigh on consumer spending and long-term growth.
Thrasher, who also manages over $800 million as a portfolio manager at The Financial Enhancement Group, ultimately emphasizes price action above all. But for now, he says the bullish momentum may be losing its edge.
