Market Internals Continue to Deteriorate

Jul 15, 2021

Market internals continue to deteriorate. There is a diminishing number of stocks that are participating in the ride higher. The longer this trend continues, the higher the odds that some type of meaningful correction could occur.

As I mentioned in my previous newsletter, the S&P 500 Index is capitalization-weighted and thus the larger cap stocks account for an outsized portion of the return.

Below is a chart of the S&P 500 Index in the upper panel. In the middle panel is the Equally Weighted S&P 500, and the lower panel is RSI 14 ( a momentum indicator).

Notice how the S&P 500 broke out of a consolidation pattern (shaded area) to new highs. However, the equally weighted index is still consolidating and with falling momentum.

The S&P 500 is advancing on the back of some of the larger stocks in the index while the bulk of the stocks within the index are individually doing much worse.

If you have any questions, please feel free to send me an email.

Craig Thompson, ChFC


Phone: 619-709-0066

Asset Solutions Advisory Services, Inc. is a Fee-Only Registered Investment Advisor specializing in helping the needs of retirees, those nearing retirement, and other investors with similar investment goals.

We are an “active” money manager that looks to generate steady long-term returns, while protecting clients from large losses during major market corrections.

Asset Solutions may discuss and display, charts, graphs, formulas which are not intended to be used by themselves to determine which securities to buy or sell, or when to buy or sell them. Such charts and graphs offer limited information and should not be used on their own to make investment decisions. Most data and charts are provided by

Asset Solutions is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

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