A Tale Of Two Markets: The Magnificent 7 And All The Rest

Blame it on the WSJ’s Jon Sindreu who wrote a column about the Magnificent 7 and all the rest in today’s WSJ (“How Long Can The Magnificent 7 Stocks Hold The Line?” [SUBSCRIPTION REQUIRED]). I know I’ve beaten this argument to death but it’s the most important technical analysis of the market. The Magnificent 7 – Apple, Microsoft, Google, Facebook, Amazon, Nvidia and Tesla – are carrying the entire market. Beneath the surface of the major, market cap weighted indexes, most stocks are languishing. You can see this in the chart above which compares the performance of QQQ – dominated by the Magnificent 7 – and the Equal Weight S&P (RSP) and Russell 2000 Small Caps (IWM). In fact, 44% stocks in the S&P are down this year, according to Sindreu. The Equal Weight S&P has gone nowhere for almost three years now as you can see in the chart below from BeSpoke.