TRADING JM

[TREND1]

EQUAL WEIGHT ETFS LAG BEHIND... The S&P 500 Index shown in Chart 1 is a market cap index. That means it gives greater weight to bigger stocks. Chart 2 shows the S&P 500 Equal Weight ETF (RSP). As its name implies, the RSP gives equal weight to each of its 500-day stocks. That means that smaller stocks are given the same weight as larger stocks. That's why the RSP is lagging behind the SPX, and it has yet to clear its 200-day line. A move above its 200-day line would help alleviate concerns about lagging "market breadth". By contrast, Chart 3 shows the Nasdaq 100 Equal Weighted Index (QQEW) already trading above its 200-day line. It's not rising as fast as fast as the Nasdaq 100 which has reached its summer high (top of chart), but both are in uptrends.