The Market Looks Strong... Until You See This

🧭 When Should You Trade?

The $NASDAQ ( 0.0% ) and $SPX ( ▲ 0.18% ) are hitting all-time highs, and it feels like the perfect time to load up on stocks.

But here’s the thing: the surface never tells the whole story.

💡 Market Internals Tell the Truth

Most traders don’t realize that indexes like the NASDAQ 100 aren’t equal weighted.
A handful of mega-caps move the entire market.

As of October 2025, just seven companies — Alphabet, Apple, Amazon, Meta, Microsoft, Nvidia, and Tesla — make up roughly 37% of the S&P 500’s market cap.

So when those giants rise, the market looks strong on paper…
…but the other 490 stocks might actually be struggling.

📊 A Clearer Lens: Watch the $RSP ( ▼ 0.35% ) 

The $RSP ( ▼ 0.35% ) is the equal-weight version of the S&P 500, where every stock counts the same.

It gives a much more realistic view of how the average stock is performing.

While the $SPX ( ▲ 0.18% ) races higher, the $RSP ( ▼ 0.35% ) has only been drifting up slowly — a quiet sign of underlying weakness.

⚠️ Another Red Flag: $S5FI

The $S5FI measures how many stocks are trading above their 50-day moving average.

Even as the market drifts higher, this number has been dropping — meaning fewer stocks are actually participating in the rally.

It’s like watching a parade where half the band has already dropped out.

Stick With the Strongest Stocks

The first thing this confirms is simple:
You should always stay in the highest-performing stocks in the market.

If you go hunting for “bottom feeders,” you’ll end up stuck in weak names that drag you down.

But if you focus on stocks with high relative strength, you’re participating in the strongest part of the market — the leaders that tend to bounce back first and move the furthest.

🎯 What This Means for Traders

Let’s simplify it with numbers:

Imagine you risk 1% of your account on each trade.
If the trade works, you make 2.5% — that’s a 2.5R trade, meaning you earned 2.5 times your risk

💬 In a good market, you can win only 4 out of 10 trades and still grow your account.
💬 In a bad market, even one winner can’t save you — your batting average drops too low.

That’s why sometimes the smartest move is to sit out, conserve capital, and wait for the next high-probability window.

🧠 The Takeaway

When participation is narrow and internals weaken, patience pays more than chasing momentum.

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