Equal Weighted S&P 500 (SPXEW) and FAAMG Did Not Overcome the Correction Gap, Bulls Are Not Yet in Control of the Market

by Saad Ullah

Andrew Thrasher states it is the sign that buyers are not yet in control of the market.

The Market Is Still Bearish Based on Equal Weighted S&P 500

Andrew Thrasher, portfolio manager for the Financial Enhancement Group and founder of Thrasher Analytics, notes that the S&P has already overcome the gap caused by the fall in early September and is now trading above the pre-September lows.

“One of the charts I’m watching, Equal Weight S&P 500 and FAAMG both unable to recover the prior Sept. lows.  A move back above here would be a good first step in buyers taking back control, hasn’t happened yet.”Andrew Thrasher via Twitter

However, the equal weighted S&P 500 index and equal weighted FAAMG still failed to recover to August levels, the past correction proved to be too significant an obstacle.

Mr. Thrasher believes that this is a signal that the bulls have not yet been able to re-seize power over the market, and further growth may be difficult.

Equal Weighted SPX Is Still Lagging

It has already become known that the equal weighted S&P 500 is still lagging after the correction while the usual capital-weighted S&P 500 has already overcome it.

This demonstrates the emergence of an imbalance: until September, large technology companies overperformed the market, while now they are still stalled, unable to finally recover from a sharp correction.

S&P 500 Correction Might Be Not Over Yet

In addition, Michael A. Gayed, analyst and portfolio risk manager, noted that so far the S&P 500 has not dipped below its 200-day moving average, although the index has done so during its remaining corrections since 2009. If the long-term trend repeats, the market expects another decline.