We often watch the performance of cap weighted indices versus the equal weight counterpart.
Why? Because divergences in performance often signal market turns.
Today is no different as we display the performances of the S&P 500 cap weight index versus the S&P 500 equal weight index.
And, as you can see, there is a wide divergence brewing.
The past 2 times that the cap weighted index was performing much stronger than the equal weighted index, stocks were near a short-term high. And shortly thereafter they declined sharply.
We are seeing the largest spread in the past 6 years between the two indices right now and the question we should be asking ourselves is: Will the result be different this time?
Might be time to monitor your risk trading profile. And stay tuned!
This article was first written for See It Markets.com. To see the original post CLICK HERE.
