We have been highlighting improving breadth for the past few weeks. While many breadth metrics are cumulative, counting how many, we are also concerned with performance. Looking at equal weight versions of the indexes relative to the cap weight versions, we can get a sense of how the average stock is performing. When the ratios are moving higher, the biggest stocks in the index are not doing all the heavy lifting from a performance perspective. Right now, the average stock is holding up.

S&P 500 EW vs. Cap Weight

The equal weight S&P 500 has been moving higher since December and is in the middle of a consolidation zone after testing the highs in May. There is a clear line of support above which we can argue that the average stock in the index is holding up. The six-month trend is slightly positive.

S&P 400 EW vs. Cap Weight

The Equal Weight S&P 400 Index is trading near the highs relative to the S&P 400, a sign that the largest stocks in the index are not doing all the work. There is support dating back to March 2021, and the six-month trend is positive.

S&P 600 EW vs. Cap Weight

The Equal Weight S&P 600 is in a 17-month consolidation relative to the S&P 600. The lower bound of that consolidation is in the process of being tested but is holding the line thus far. The six-month trend is slightly negative, something that equity bulls want to see reversed in the near term.

NASDAQ 100 EW vs. Cap Weight

The Equal Weight NASDAQ 100 is in the process of making a bearish-to-bullish reversal from the December 2021 lows. The ratio is above the March 2022 peak and has been making higher highs and higher lows. The six-month trend is positive.

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