By Lawrence G. McMillan
For quite some time, $SPX (and other capitalization-weighted indices) have been supported by the strong performance of the Magnificent 7 (AAPL, AMZN, GOOGL, META, MSFT, NVDA, and TSLA). Meanwhile, the “average” stock has been struggling. We have mentioned this many times in recent weeks. Lately, there has been some improvement in the ratio between $SPX and broader-based indices. It may be worth trying to trade the spread between them.
This is a brief article, which we will expand on in the coming days. There are two graphs here that show the ratio between 1) IWM and SPY, and 2) RSP and SPY. RSP is the equal weighted S&P 500 Index. It reflects more of what all stocks are doing, rather than just the heavily-capitalized Mag 7 stocks that dominate $SPX...
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