Looking at Equal Weight vs. Cap Weight ratios can give investors an understanding of how the average stock in the index is performing. By giving each stock the same level of importance, we can determine if the index heavyweights are doing all the lifting or if the smaller names are punching above their class. In all but the S&P 600, the latter is the case. The EW index leads the cap weight version. This is an indication that the largest names are where the risks lie.

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S&P 500 EW vs. S&P 500

The ratio is in a sloppy consolidation. However, we can see a horizontal resistance point and a series of higher lows. Odds favor a break of resistance and further outperformance on the part of the Equal Weight Index.

S&P 400 EW vs. S&P 400

The case can be made that the S&P 400 EW Index has been making higher lows and higher highs relative to the S&P 400 since June. This point to outperformance by the average stocks in the index.

S&P 600 EW vs. S&P 600

It appears that the S&P 600 EW Index has run through its bullish cycle (March 2020 – June 2021) and is now turning lower. The ratio has broken below support and has room for the downside.

NASDAQ 100 EW vs. NASDAQ 100

After a long trend of underperformance, the NASDAQ 100 EW Index is trying to complete a bearish-to-bullish reversal relative to the NASDAQ 100. A sustained move above resistance would complete the turn.

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