Equal-Weighted Index Nears Record Highs, Signaling Broadening Market Rally
• The S&P 500 equal-weighted index, where all stocks have an equal weight, is nearing record highs, signaling a broadening of the market rally.
• The equal-weighted index has been underperforming the market cap-weighted S&P 500 for a while, but that may be changing.
• The ratio of the equal-weighted index to the S&P 500 is nearing pandemic lows, presenting a potential inflection point.
• As the equal-weighted index outperforms, it suggests more stocks beyond the mega-caps are participating in the rally.
• Broadening out the rally beyond the handful of huge tech stocks would be a healthy sign for the overall market.