Many have argued that recent market weakness is purely a function of the “growth trade” rolling off. Darlings such as Tesla (TSLA) and Nvidia (NVDA) have seen major declines in 2025, pushing the broader cap-weighted indices lower. Arguably, this is a problem for index investors, as the largest weights in the index are causing the most pain.
However, if we look at the Equal Weight S&P 500, we will see a similar trend playing out.
S&P 500
For the second consecutive week, the S&P 500 closed below the 60-week moving average. More importantly, perhaps, is the fact that the moving average is beginning to flatten. Essentially, the long-term trend is shifting from rising to flat. Bulls want to see this key measure of trend recaptured and begin to turn higher in short order.
Source: Optuma
S&P 500 Equal Weight Index
Many in the bullish camp have argued that there is not a major cause for concern here because it is only the MAG 7 that is pulling the market lower. Yes, the MAG 7 has been hit hard—no one is debating that. But, at the same time, the S&P 500 EW has a structure that is very similar to that of the S&P 500. It sits below the 60-week moving average, which is beginning to shift from rising to flat.
Meanwhile, Equal Weight MAG 7 is holding above the still-rising 60-week moving average.
Source: Optuma
NYSE Advance/Decline Line
Despite a reprieve in the market last week, the NYSE Advance/Decline Line actually ticked lower on the week. At the same time, the one-year stochastic moved down as well. This metric now sits well below 80%.
Source: Optuma
The simple fact of the matter is that for U.S. investors investing domestically, breadth is weakening, confirming the recent move lower in equity prices.
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