You're fine, it's awkward language. Correct response:

"Not much, you?"

However, if something IS up then you are welcome to discuss it.

"Going to class, hoping I can get an extension on that essay."

"My life is a trainwreck of nausea-inducing anxiety and I'm terrified even speaking to you."

"Got this jello, it's pretty great."

Consider it a way of saying "what's been going on?" Usually you'd respond with something like "not much"

lol that and the shorten SUP im like um sky blue what you want?

Go ahead and respond with good. Just do it it is an awesome response to that question. lol

They mean what are you up to, or what are you doing

"Not shit. What's up with you?"

Up dog.