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Not All Sell-Offs Are the Same — Look to the Equal-Weight S&P 500 ETF for Clues Monday’s massive gap down rattled a lot of traders, but if you were paying attention to the bigger picture, it was clear this was just a reset — not a full-on breakdown. The key to understanding a move like this isn’t just looking at the S&P 500 (SPY) itself but breaking it down into its components and seeing what’s really happening under the surface. Cap-Weighted vs. Equal-Weighted One of the most important things to remember is that the S&P 500 is a market cap-weighted index, meaning the largest companies — like Apple (AAPL), Microsoft (MSFT) and Nvidia (NVDA) — have a disproportionate influence on the index’s movement. When those stocks take a hit, it can make the entire market look worse than it actually is. That’s why I always check the equal-weighted version of the S&P 500 (RSP) to get a clearer picture. On Monday, SPY gapped down hard because of a sell-off in Technology (XLK). But RSP? It barely moved. That tells me this wasn’t a broad-market meltdown — it was a tech-driven event. If the entire index had fallen in unison, that would have been a different story. Instead, Financials (XLF) actually gained, and sectors like Health Care (XLV) and Consumer Discretionary (XLY) held steady. AI-exposed stocks took a huge beating on Monday, and investors may be forced to reconsider their investments going forward. It's safe to say the stock market is now on red alert! And this volatility could extend over the weekend, giving us yet another shot at weekend income. I’ll show you live at 3 p.m. ET today, Jan. 30, how you can tag along as we shoot for this weekend's income play. As always, we can't guarantee profits or prevent losses… Kane Shieh Kane Shieh Trading Follow along and join the conversation for real-time analysis, trade ideas, market insights and more!
*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk. |
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