📈 This Rarely Happens...

Use this anomaly to your advantage.

S&P 500 vs. RSP

Right now we are seeing one of the largest disparities between the S&P 500 and the RSP. RSP is the equal weight S&P 500 index.

This means that it includes all of the same stocks as the S&P 500, however it assigns equal weight to each of them, while the S&P 500 has greater weighting in mega cap tech such as AAPL, MSFT, etc.

So what this means is that we have seen massive buying in the Magnificent 7, while other stocks and sectors lag significantly.

This puts us in a precarious position when you consider what happened on July 11 (which was CPI day).

You can see that on this day, RSP was significantly leading the S&P. This means that the big dogs were being sold, while other stocks were being bought.

However, as you move into July 17th on, the RSP stopped seeing a lift, and instead everything started selling off.

This causes concern because after investors added exposure to RSP names, the index got frothy and started pulling back. Now these positions are moving to breakeven/losses, which would cause investors to blow out those trades, leading to further selling.

So watching what happens with RSP is going to be very important because it is possible we see mass selling as the new trades that were put on after CPI get closed.

I explain this in more detail here: