Since the start of this decade, the cap-weight S&P 500 Index has dominated its equal-weight counterpart. The SPDR S&P 500 ETF Trust (SPY) has gained 95.38% while the Invesco S&P 500 Equal Weight ETF (RSP) has gained 60.64%. Other than 2022 when RSP held up much better than SPY, there has been consistent leadership from SPY over RSP. In recent years, a chief concern amongst investors has been a lack of breadth in the US market as a handful of mega cap stocks have routinely accounted for an outsized portion of the return of the S&P 500. Nonetheless, the S&P 500 has chugged higher and higher with investors in smaller names left behind. While there is no sign that this long-term trend is changing, shifting our focus to lesser time frames can give us an indication of when either cap-weight or the equal-weight has gotten ahead of its skis. Looking at the rolling 3-month performance spread between SPY and RSP, SPY has outperformed RSP by over 5%. Historically, even in recent years, this has been a spot where RSP begins to “catch-up” on a relative basis.

Looking at forward returns following SPY outperforming RSP by 5% in a 3-month span, excluding clusters within three months, SPY tends to continue to outperform across most time frames apart from 3-month forward returns which RSP edges out SPY. So, while SPY has been on a very strong run the last three months, that doesn’t spell doom for the cap-weight nor does it mean the equal-weight is poised to materially outperform moving forward. One-year forward returns are strong and consistent for both SPY and RSP, a good sign for domestic equities moving forward.

In May and early June, one industry of the market the analyst team closely monitored was Transportation as it was among the laggards off the April lows. Though showing improvement from a trend perspective at the time, Transportation fell behind the relative leaders off the market’s lows, broader Technology, and other subsectors within Industrials. Since the beginning of Q3 though, the industry has benefitted from rallies within other subsectors. Airlines were the primary culprits for upside action in recent weeks, helped in large part by headline earnings from names like Delta (DAL) and United (UAL) helping lift the rising tide.  

While subsectors like Airline (DWAECAIRLINE) have taken most of the limelight within Transportation related subsectors to begin Q3, Marine Transports (DWAECMARINETRANS), Tires (DWAECTIRE), and Trucking (DWAECTRUCKING) have also outpaced broader market US equity indices, while Transportation Services (DWAECTRANSVC), Railroads (DWAECRAILROAD)  and Aerospace (DWAECAEROSPACE) and Air Freight (DWAECAIRFREIGHT) have all been positive.

Recent improvements within Transportation have brought the group up from an average group score in low 3 range on the Asset Class Group Scores page to end of June to above 4 for the first time since September 2023. Prior to the recent pop in the group’s average score, Transportation had scored as low as 1.6 in early April, and the notable climb from those lows makes the group second-most improved as defined by Score Direction (an evaluation of average group score improvement within a six-month timeframe) among the sector groups and fourth among all 134 asset groups on the Asset Class Group Scores page. Transportation now ranks among the upper echelon of groups scoring above 4 highlighting the resurgence as a leader in the intermediate term.

Given the improvement within Transportation, some may be tempted to look for the first available ETF or stock they can think of, that may be related. While two major transportation ETFs – the iShares Transportation ETF (IYT) and SPDR Transportation Fund (XTN) – maintain exposure to the exact same 44 stocks, the allocation of those stocks lends to different technical pictures.

On the default trend chart, IYT moved back into a positive trend to begin July along with giving a second buy signal off the April lows. The trending improvement brought the fund score of IYT up to 2.76, but below the acceptable 3 score threshold. On the other hand, XTN saw its default trend chart move back into a positive trend in mid-June before continuing on to a fourth buy signal in the latter part of the month. July’s action kicked off with a move from the lower to upper $80s before pulling back from overbought territory early last week. Intraday action Wednesday (7/23) brought the chart of XTN back into a column of Xs at $87. Along with the trend improvement, XTN has shown relative improvement as well with the market RS chart against the S&P 500 Equal Weight Index moving back into a column of Xs, indicating near-term outperformance over the market, following action on 7/10. Given the relative improvement, XTN maintains a 3.78 fund score, a full point higher than IYT. So, what derives the difference between the two?

The difference between technical pictures roots back to the allocations of the ETFs; with IYT taking a cap-weighted approach and XTN taking a more equal weighted approach. As the table below shows, the most notable allocation differences lie in Uber (UBER) and Union Pacific (UNP), which make up 38% of the allocation. XTN’s equal weighted allocation have performed better than IYT off the market’s April lows as the improvement within transportation-related subsectors provided a boost. Those seeking exposure to XTN may look to dollar cost average into a position as the fund’s price consolidates in the mid $80s.

Each week the analysts at NDW review and comment on all major asset classes in the global markets. Shown below is the summary or snapshot of the primary technical indicators we follow for multiple areas. Should there be changes mid-week we will certainly bring these to your attention via the report.

Remember, these are technical comments only. Just as you must be aware of fundamental data for the stocks we recommend based on technical criteria in the report, so too must you be aware of important data regarding delivery, market moving government releases, and other factors that may influence commodity pricing. We try to limit our technical comments to the most actively traded contracts in advance of delivery, but some contracts trade actively right up to delivery while others taper off well in advance. Be sure you check your dates before trading these contracts. For questions regarding this section or additional coverage of commodities email james.west@nasdaq.com.

Data represented in the table below is through 7/22/2025:

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