Take a break from S&P 500, check out what S&P 100 is saying

The S&P 500 index, and the SPDR S&P 500 ETF Trust (SPY) that tracks it, have been deceiving investors. Or, put more properly, that index has been less than meets the eye. Because not only has it been historically top-heavy, with a small number of stocks performing while many others cancel each other out. Even within the top 100 stocks by weight within that index there’s what the pros call “dispersion.”

This might matter during the last five months of 2025. It is well-known on Wall Street that the market is dominated by the Magnificent 7 and a relatively small number of others. But since so much money is invested in the S&P 500, and the rich grew richer the past few years within that index, the other stocks just do not impact the returns very much. So, when much of the market meanders, the headlines won’t see it.

OEF and EQWL: S&P 100 ETF trackers, and why they matter

Those two ETFs that own the same stocks, but in very different weightings. First is OEF, a $21 billion ETF which has tracked that top 100 stocks by weight within the S&P 500 since it debuted in the year 2000. The OEF portfolio trades at 28x trailing 12-month earnings. And, as a fun fact, the S&P 100 used to be the most popular optionable index, for a long time. Nowadays, the S&P 500 is much more liquid.

The weighted average market cap of OEF is $865 billion. Think about that. 100 stocks, nearly $1 Trillion average size? It makes more sense when we consider that even within those 100 names, 7 companies make up 47% of the portfolio. The other 93 stocks account for the other half. That is concentrated. And it explains a lot about why the market broadly has done well. That’s the purple line above.

The orange line? That is the exact same 100 stocks. But they are equally weighted as of every rebalancing date for the Invesco S&P 100 Equal Weight ETF (EQWL).

How popular is EQWL? Compared to OEF, it is barely noticeable. EQWL has about $1.5 billion in assets (less than 1/10 that of OEF), and is in its eighteenth year of existence. It sells at 21x trailing earnings, but since the start of 2020, it is 35% behind OEF. You know, the same stocks, but weighted differently.

The technical charts for these two ETFs also show the problem here, so let’s start with those. Then, I’ll show a chart that clinches the argument for me, that the market is already breaking down. Even if the headlines don’t scream about it.

Here’s OEF. To me, this looks just like the S&P 500, which makes sense given the thesis here. It looks very toppy, but not tipping over.

Here’s EQWL, and to me, this one is just about to dip. Or much worse. Any time I see a price rally that sharply, then roll over as we see in both the price itself, and the PPO indicator at bottom, that is a yellow flag. Not a red one, but setting up to be one.

The stock market is not a market of stocks anymore

In other words, “the market” is doing OK, but stocks are not. I’m taking that squeezing of market price profits into fewer and fewer stocks very seriously. Sure, this could set up to be yet another heroic attempt at a comeback rally for value stocks, smaller stocks, and really anything not already in the top 10 or 20 names by size. But I’m not holding my breath for that. I see this as an underrated, underfollowed indicator of market health. Poor health.

And as I thought about how best to convey this in the space allotted here, I took a convenient and, I think effective, shortcut. Here’s what it looks like.

OEF vs. EQWL, price chart. Source: Ycharts.

Here’s the potential tipping point

The key part of that chart above is the graph in the lower section, which shows the outperformance of OEF versus EQWL over 3-year rolling periods. It is about as high as it was at the start of 2022, which is really the only sustained bear market we’ve seen in the US equity business since the global financial crisis back in 2007-2009. The rest have been flash-crashes.

Know what you own, especially if you think the S&P 500 index has you covered due to its vast diversification. That was once true, but that was then. And this is now.