Kudos to the splendid Decision Point site for this three-year regard of the weighted in addition to unweighted versions of the S&P 500 Index.
When marketplace stance is bullish, nosotros come across a speculative involvement inwards the smallest components of the index. This involvement leads to outperformance of the unweighted index versus its cap-weighted counterpart.
Conversely, when traders in addition to investors are to a greater extent than defensive, they shy away from to a greater extent than speculative names in addition to stick to the virtually established bluish chips. That leads the weighted S&P Index to outperform the unweighted version.
Note how the ratio betwixt the unweighted in addition to weighted indexes (bottom pane) peaked early on inwards 2007, good ahead of the bull marketplace peak inwards $SPX. The ratio besides bottomed inwards December, good ahead of the March bottom inwards $SPX. The ratio is currently inwards a raging bull marketplace mode, exceeding its bull marketplace peak.
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