The first half of 2024 is about to close its books, and one of the notable market stories so far has been the difference in performance between the market cap weighted S&P 500 index and its equal weight counterpart.
See a breakdown below between the two indices:
All comparisons below for S&P 500 market cap index and S&P 500 equal weight index are demonstrated through SPDR S&P 500 ETF Trust (NYSEARCA:SPY) and Invesco S&P 500 Equal Weight ETF (NYSEARCA:RSP), respectively.
Performance
From a YTD vantage point, the market cap index has climbed 14.7% in the first half of 2024 while the equal weight index has logged a significantly smaller advance of only 3.9%.
On a shorter time frame, since the May 31 close, the market cap S&P has shifted higher by 3.5%. The equal weight index has moved in the opposite direction, dipping 1.2%.
Relative Strength Index Indicator
According to the RSI, the market cap index trades at 70.02 which marks the start of overbought conditions. At the same time, the equal weight cap index sits down at 44.7 and is nowhere near overbought territory. For reference, levels at 70 or higher are considered overbought and levels below 30 are referred to as oversold.
50-Day Moving Average
When looking at the 50-day moving average for both the equal weight S&P and market cap S&P, investors will see that the equal weight index trades below its 50-day moving average by 0.2%, while the market cap index is noticeably above its technical 50-day moving average by 4.3%.
What’s Next?
Societe Generale believes the S&P 500 is at a “critical juncture” and outlined two scenarios wherein the index could crater to 4,000 points or soar into ‘bubble’ territory above 6,600 points.
For investors that are further looking to track the overall performance of the benchmark S&P 500, they can look towards both exchange-traded funds and mutual funds as a proxy for exposure towards the index. Some funds worth noting are as follows: (VOO), (IVV), (SSO), (UPRO), (SH), (SDS), (SPXU), (FXAIX), (VFIAX), and (VFFSX).
