Hey, Ross here:
Despite the big move down right after Powell’s speech last Wednesday, markets recovered – and the S&P 500 closed at yet another record high for the third week in a row.
Yes, Big Tech made an outsized contribution to this upward move – with Meta adding $200 billion in market cap in a single day.
But as today’s chart shows, it’s much more than just Big Tech.
Chart of the Day
This is the Equal-Weight S&P 500 Index – which basically shows us how the S&P 500 would look if all 500 stocks were weighted equally instead of by market cap.
In effect, it places the biggest stocks on the S&P 500 on equal footing as the smallest ones.
If Big Tech was largely responsible for the S&P 500’s blistering performance lately, we would expect to see the Equal-Weight S&P 500 Index and the actual S&P 500 index moving in opposite directions.
But as you can see, that is not the case.
While it hasn’t quite matched the recent upward pattern of the S&P 500, it has not diverged from it either. It’s still at 21-month highs.
So yes – while Big Tech is having an outsized effect on the market (nothing new here) – that’s just part of the bigger story.
Plus, there’s also a hidden pattern forming in the Equal-Weight S&P 500 Index – which I explain in the Insight of the Day.
Most don’t pay attention to this index in the first place – so most won’t notice it.
Their loss.
Insight of the Day
If you look at the recent price action of the Equal-Weight S&P 500 Index, you’ll notice a classic consolidation pattern – something that often precedes a big breakout.
Look at the chart of the Equal-Weight S&P 500 Index again. See the classic consolidation pattern forming?
If there’s a breakout in the index, it means the smaller – and largely ignored – S&P 500 stocks are also breaking out.
And that’s an opportunity – because their profit potential is far greater than those of the trillion-dollar Big Tech companies.
And it’s not like you have to ignore tech entirely.
In fact, many of these smaller stocks are tech companies – just ones most have never heard of…
A prime example is my #1 AI stock – which you can get all the details on by clicking here.
Ross Givens
Editor, Stock Surge Daily
