What important story is the S&P 500 Index (^SPX) telling? It depends on which two tracking ETFs you’re listening most closely to!
Today, I’m sharing two MoneyShow Charts of the Day. The first shows the Invesco S&P 500 Equal Weight ETF (RSP), while the second shows the more widely followed SPDR S&P 500 ETF (SPY). As you probably guessed already, the RSP weights every stock in the index equally...while the SPY weights components by market capitalization.
Chart #1: Invesco S&P Equal Weight ETF (RSP)
Source: StockCharts.com
Chart #2: SPDR S&P 500 ETF (SPY)
Source: StockCharts.com
You can see that the RSP has been stair-stepping higher for the last few months, while the SPY has been chopping sideways. They both broke out to the upside this week. But on a year-to-date basis, the RSP has been the (modest) winner with a 14.9% gain versus a 13.2% rally for the SPY.
While I didn’t show it, the iShares Russell 2000 ETF (IWM) is doing even better than the SPY – up about 22.7%. The iShares MSCI ACWI ex US ETF (ACWX) is also slightly outperforming, up 14.5%.
So, what’s the important story here? That we aren’t in a megacap-only market anymore. We have a broader advance underway. You can and are making more money in smaller cap names than larger cap ones...and in foreign stocks than domestic.
If you’re a trader looking for the most bang for your buck, don’t ignore this. You can’t focus exclusively on yesterday’s biggest winners. You have to follow what’s winning NOW – and in my opinion, could keep winning.
