Below is a reprint of an article written Thursday in the subscriber-only DecisionPoint Alert:
One of the things we keep track of is the performance of the S&P 500 Index (SPY), which is cap-weighted, versus the S&P 500 Equal Weight Index (RSP). In a healthy bull market, the equal-weighted index (tan line) will outperform the cap-weighted index (blue line) because the advance is broadly based. This is demonstrated by the chart below.
As an advance gets closer to a top, participation narrows and the cap-weighted index takes the lead. We are now at that point in the rally, as you can see from the next chart — the leadership shifted months ago. That doesn’t mean that the rally has to end right away, but it will probably end sooner rather than later.
Good Luck & Good Trading,
Carl Swenlin & Erin Swenlin
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About the author:
is a co-founder of the DecisionPoint.com website along with her father, Carl Swenlin. She launched the DecisionPoint daily blog in 2009 alongside Carl and now serves as a consulting technical analyst and blog contributor at StockCharts.com. Erin is an active Member of the CMT Association. She holds a Master’s degree in Information Resource Management from the Air Force Institute of Technology as well as a Bachelor’s degree in Mathematics from the University of Southern California.
About the author:
Carl Swenlin is a veteran technical analyst who has been actively engaged in market analysis since 1981. A pioneer in the creation of online technical resources, he was president and founder of DecisionPoint.com, one of the premier market timing and technical analysis websites on the web. DecisionPoint specializes in stock market indicators and charting. Since DecisionPoint merged with StockCharts.com in 2013, Carl has served a consulting technical analyst and blog contributor.