Two Pictures that Blow my Mind
- cornerstoneams
- Aug 7
- 5 min read
Updated: Aug 13
We are in a bull market, right?
We emphasize “market” in the above question/acknowledgment of the consensus view that the stock market is in an upward trending direction, i.e., a bull market.
It is through the lens of the market, as in the broad landscape of the stock market, that brings life to the question mark.
On a personal note, this walks us right into my mind being blown on a consistent basis here in 2025, as I look at two charts in particular. To be fair, which frankly only adds to my described state of mind, there are several other, if not many, charts I could add to the two below that further add to the opening question.
In the name of brevity, the two selected consistently draw my attention while simultaneously trying to keep in mind that we are in a bull market.
Let’s get right to the two charts with some brief backdrop for context.
Equal Weight vs. Weighted
Our first look relates to the ongoing watch of the S&P 500 Index. More specifically, we have shared over various editions the performance of the equal-weight S&P 500 index compared to that of the traditionally reported, weighted S&P 500 index.
In the traditionally reported version, the S&P 500 stock index has certain companies that carry a large weight within the construction of the index and, as a result, have an outsized impact on its performance.
If a couple of handfuls of companies comprise a notable total weight of its construction, they collectively can make the stock market as a whole appear to be performing quite well, provided they themselves are trending upward via stock price appreciation.
The equal-weight version erases this potential issue, as all 500 companies carry the same weight, and in so doing, a handful of companies cannot have an outsized impact on the index performance.
With the above in mind, we can then place the two together in a chart to see which of the indices is outperforming. Adding to this, we can also use this as a historical tool and run the chart with some history to point out how the relationship typically acts when participating in a solid bull market period.
In one fell swoop we can do a quick view of the general stock market landscape via these two differently constructed S&P 500 indices.
The above chart encompasses this 21st century in order to get some historical perspective. When the line chart is moving upward, this tells us that the equal-weight S&P 500 index is outperforming the weighted S&P 500 index.
The significance of such outperformance is that the broad stock market is fully participating. This is one of many tools to help gauge the true strength of the stock market at large.
Our red arrows denote the liftoff of new bull markets, from the general wreckage of the previous bear market, in the past 25 years.
It is customary for a new bull market to be strong and robust across the market landscape. The outperformance (line chart trending upward) of the equal-weight S&P 500 to that of the weighted version offers a broader, more robust bull market landscape.
More to our current period, our black down-trending arrow highlights the strange behavior coming out of the 2022 downturn.
Rather than the equal-weight S&P 500 index kicking into overdrive with a continuing strong uptrend, it did a historical opposite and has essentially nosedived in comparative performance to that of the weighted version.
To the lower right of the chart, we see in the last year this market landscape gauge would attempt to gain some traction but would quickly turn south again.
Adding to this, in the far right corner, note the short blue horizontal line denoting that this strange bull market behavior is only continuing with a new low in this relationship over the previous week or so.
A series of lower lows for a gauge, or meter, if you will, which historically aids in measuring the true strength of the broad stock market landscape, makes an observer say, Wait, what!?
When in a rock-solid, all-four-hooves-a-rocking-type bull market, new lows in the above is unthinkable. Hence, the aforementioned description of my mind when viewing the ongoing developments above.
Digesting the chart in its totality, our current bull market era (think post-2022) sticks out like a sore thumb relative to past periods, as highlighted by our red arrows.
A Year-to-Date Performance View
Our next chart is a real doozy which adds to the above storyline, albeit in an even broader sense.
Above we are looking at the percentage increase (or decrease) in performance for this year, 2025, for three broad vehicles.
From the bottom to the top: Our first (blue line) is the S&P 600 index, which is the S&P’s small company index. The next up (middle, black line) is the weighted S&P 500 index itself. The top line (red) is the performance of gold.
To begin, if you were to inform me that we are in an established bull market but briefly added that the small company indices, essentially, have yet to experience positive returns to date, I would respond with, “You should rethink your bull market description.” Again, btw, we emphasize market, within the bull market phrase.
In a true bull market, historically speaking, small company, as well as middle-sized company indices (small and mid-caps, using industry lingo), consistently outperform their larger market brethren, like the S&P 500, as displayed above.
To see they are not only not leading but are also performing atrociously when viewing them on a comparative performance chart is hard to fathom when using the history of bull markets as a guide. (While a mid-cap index is not shown above, their performance has also been subpar.)
And then there is Gold
Importantly, this is not an edition on gold, so we will steer clear of a plethora of commentary that could be shared here when including gold into the mix.
Keeping this very high level, as well as succinct, the massive outperformance of gold, in combination with the strange bull market behaviors displayed above, only adds to my “blown mind,” if you will.
Gold, in percentage terms, is displaying nearly 4x the level of performance to that of the S&P 500 index above thus far in 2025. This massive outperformance is hard to fathom if we are in a rock-solid bull market run.
In a nutshell, the two charts above speak to what is actually taking place in the general market landscape. That is, market participants are very selective in what they are willing to bid up. Using industry lingo, we describe this as a very narrow market that is limited in its participation.
In an edition a few weeks back we offered a view that said participants were quickly becoming less selective. Said differently, we were offering that participants were suddenly willing to broaden out the strength of the stock market rather than being so selective.
Well, that disappeared quickly, as they have become even more selective than what they had been previous to that edition. This is best understood by our first chart, whereby a new low has been put in within that relationship chart, as described at the outset of this edition.
If this is a “State of the Market” type address, if you will, participants are offering that they are very selective on what they are willing to bid higher while offering a deteriorating market landscape. That is, they continue to become even more selective.
For now we continue to watch the market intricacies for signs of further deterioration or of improvement. We will share accordingly as time unfolds.
I wish you well…
Ken Reinhart
Director, Market Research & Analysis
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