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.
Insight of the Day
Don’t be surprised if we see another shallow pullback or sideways movement as the market digests the Fed’s messaging.
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.
Embrace the surge,
Editor, Stock Surge Daily