This is Why I’m Excited…

The chart above is for the Equal Weight S&P 500 ETF, which is an ETF that tracks the S&P 500 IF every company on there had equal weight – instead of being weighted by market cap.

In short, the smallest company on the S&P 500 is given the same weight as the largest.

What this index tells us is the breadth of the market – how much are the smaller names actually contributing to the rally?

As you can see for the past couple months, this index has been falling, while the regular S&P 500 has been rising.

This means a lot of the rally was indeed being driven by the big names – participation was low.

But with the weight of the debt ceiling drama no longer around the market’s necks, things appear to have changed.

As you can see in the white circle, the equal-weighted S&P 500 has just broken out strongly – this time in tandem with the regular S&P 500.

This is a good sign that we could see some solid gains in the lesser-known names in the coming weeks.

I’m excited.

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