For the longest, analyst were not convinced of the market strength although market was making new highs. This is because in their opinion the market was being led by a handful of stocks and the broader market was not participating in this uptrend.
Today we have RSP, the equal weighted S&P 500 index breaking out of a triangle and looking set on claiming new highs. So what's the Difference between SPY and RSP ? I'm glad you asked :)
SPY is a cap weighted index meaning that the companies with the highest (smallest) market cap hold more (less) weight in the Index and while the equal weighted means each companies have the same weight (2% in the RSP). As of June 21st 2024 (that'll work for the explanation)
MSFT 7.19%
NVDA 7.01%
APPL 6.61%
AMZN 3.69%
Totaling 24.5% in the SPY. In the RSP they would each have a weight of 2% totaling 8%. Great, but what does that mean ? This means that large caps have less power and small and mid caps have more influence in the RSP than in SPY. So RSP breaking out might potentially signal that small and mid cap companies are on the move.
Fundamentally this could be due to the fact that if rates come down, the smaller companies who rely more on debt might face less financial pressure and increase their bottom line.
So its good to keep our eyes open on the smaller companies.
This is not a call to action nor a recommendation but more of an idea im throwing out there.
Cheers,
Today we have RSP, the equal weighted S&P 500 index breaking out of a triangle and looking set on claiming new highs. So what's the Difference between SPY and RSP ? I'm glad you asked :)
SPY is a cap weighted index meaning that the companies with the highest (smallest) market cap hold more (less) weight in the Index and while the equal weighted means each companies have the same weight (2% in the RSP). As of June 21st 2024 (that'll work for the explanation)
MSFT 7.19%
NVDA 7.01%
APPL 6.61%
AMZN 3.69%
Totaling 24.5% in the SPY. In the RSP they would each have a weight of 2% totaling 8%. Great, but what does that mean ? This means that large caps have less power and small and mid caps have more influence in the RSP than in SPY. So RSP breaking out might potentially signal that small and mid cap companies are on the move.
Fundamentally this could be due to the fact that if rates come down, the smaller companies who rely more on debt might face less financial pressure and increase their bottom line.
So its good to keep our eyes open on the smaller companies.
This is not a call to action nor a recommendation but more of an idea im throwing out there.
Cheers,
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.