Equally Weighted Index Suggests SPX Could Go Near its 2016 Lows
This is simply (forget all the FED stimulus holding these markets up) a case of market-cap weighted exaggeration vs an equally-weighted reality:
While the S&P500 Index (market-cap weighted) is bear rallying higher since its March 2020 lows, the Value Line Geometric Composite Index (equally weighted) is NOT confirming this move at all.
The SPX has made it back near its 2019 lows and 2018 highs while the Geometric Composite Index is currently only back up to near its 2016 market levels. This illustrates to me that the SPX is being pulled higher by the massive market cap of the big 5 technology stocks of the SPX - remove those names or equally weigh them in the index and we should be much lower, at least near the 2000 level on the SPX.
While the S&P500 Index (market-cap weighted) is bear rallying higher since its March 2020 lows, the Value Line Geometric Composite Index (equally weighted) is NOT confirming this move at all.
The SPX has made it back near its 2019 lows and 2018 highs while the Geometric Composite Index is currently only back up to near its 2016 market levels. This illustrates to me that the SPX is being pulled higher by the massive market cap of the big 5 technology stocks of the SPX - remove those names or equally weigh them in the index and we should be much lower, at least near the 2000 level on the SPX.
