Don't Ignore This Chart!

Equal-weight S&P 500 Outperforming Cap-weight S&P 500


The chart below shows the ratio of the S&P 500 Equal-Weight Index to the S&P 500 ($SPXEW:$SPX). Also known as the price relative, this ratio chart compares the performance of the S&P 500 Equal-Weight Index to the S&P 500. $SPXEW outperforms $SPX when this ratio rises and underperforms when this ratio falls. As we can see on this chart, the equal-weight index has been outperforming the cap-weight index since mid October. This is positive for the broader market because it shows relative strength in the "average" stock in the S&P 500. In other words, this rally since October has been driven by the rank-and-file stocks in the S&P 500, note the generals. The indicator window confirms strength because the S&P 500 Equal-Weight Index hit a new high this week. 

Click this image for a live chart.

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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