A Failed Breakout

When most people talk about “the market,” they mean the S&P 500 or the Dow. 

That’s the default. The number on the news ticker. The benchmark everyone measures against.

But it simplifies something far more complex.

The market isn’t a single index. It’s a market of stocks.

And this week, that market of stocks is telling a different story.

The S&P 500 is market-cap weighted, so the biggest companies carry the most influence.

It’s not a flaw, it’s a feature. 

Momentum gets rewarded, and the biggest names pull the most weight.

Today, the top 30 stocks account for as much weight as the bottom 470... COMBINED.

So when those names rip, it can create an illusion of strength.

That’s where equal-weight indexes come in. They strip out the size bias. One stock, one vote.

I’ve talked about the equal-weight S&P 500. And I’ll say it again: this one chart tells 500 stories.

This week, the story is shifting.

$RSP recently tried to break out. It made a marginal new high, but momentum didn’t confirm. 

A classic Bearish RSI divergence.

Now we’re seeing downside follow-through, down everyday this week. 

Nothing catastrophic but something to keep an eye on. 

While the S&P 500 looks strong thanks to its dominant leaders, the average stock is quietly pulling back.

This is why I don’t use weak breadth to short the index outright.

Cap-weighted indexes don’t need everyone participating.

The generals can keep marching, even if the troops fall behind.

But make no mistake....when breadth breaks down, it means something.

It tells you there’s selling under the surface.

It tells you the pullback might already be happening.

This isn’t about panic. It's about paying attention.

Breadth tends to weaken before the index reacts.

That’s the value. It gives you a head start. 

It helps you prepare, not scramble.

For now, I’m just listening.

One index. 500 stories.

And most of them aren’t as bullish as the headline suggests.

Anyways, that's my two cents.