Notes from Nagle August 2025

By Peter Nagle

8/1/25

Greetings. I’d like to review how the US Market is doing these days using a very interesting indicator: the 50 day moving average (50 DMA). Sounds technical, I know, but here’s what it means: It’s an averaging of the market, like the S&P 500 for instance, on a daily basis. But it’s more than just an average of one day. The Market is open daily during the week so a better indicator than just one day would be multiple days, right? How about 50 days? That would be even better. An average of the last 50 days. 

Even better, what if you could compare one 50 day period with another? That would tell you the direction of the market because you could plot each 50 day average and see whether the averages go up or stay flat or go down! So a 50 day moving average is just the last 50 days of market closes, averaged into one number. In fact, you could do that every day couldn’t you? If you did, that would give you the direction of the market in real time. 

But that’s only part of the point. There’s one more very important step. You’ve calculated the 50 DMA, and you now do it every day to see what the direction of the market is. Well, great, it’s up. But we already knew that from the news. The next step is seeing whether the level of the Market today is above or below the plot line that you just drew of all the last 50 DMA’s. 

Why is that informative? A stock or index trading above its 50-DMA, especially when the line is trending upward, signals strength and bullish momentum. The 50 DMA often acts as a support level during pullbacks—when a stock bounces off it and goes back up, it shows buyer confidence and continued strength.

It also measures how many stocks are participating in a market move. It’s considered strong (bullish) when 70%+ of stocks in the S&P 500 are above their own 50 DMAs, weak (bearish) below 30%, and neutral between 40%-60%.

Currently, 60% of S&P 500 stocks are above their 50 DMAs—positive, though not as strong as recent periods where breadth topped 70%. So the 50 DMA is one way to measure the strength, or weakness, of the Market and even help you decide what to do. 

Bottom Line:
The 50 DMA and how many stocks are above it together offer powerful insight into market momentum and investor sentiment. And historically, when the SP 500 is above it’s 50 DMA for 6 months or more, it’s higher by 12-15% one year later. Doesn’t mean we won’t see a correction in between, in fact I think we will, but Markets look positive over the next year or so. 

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I provide financial advice to individuals in our Abiquiu community at no charge as a way of giving back. I also wear a completely different hat as a Spiritual Director. If you have questions in those areas feel free to contact me. I’ll do the best I can to help you sort through the issues. 

Peter J Nagle
Thoughtful Income Advisory and
Soulwork Spiritual Direction
Abiquiu, NM
505-423-5378 (mobile)
[email protected]