Finding Opportunity Amidst S&P 500’s All-Time Highs

A Thought on Current Market Dynamics

As the S&P 500 continues to surge, hitting yet another new record on Wednesday, questions loom over the sustainability of such growth. With the memories of 2024’s impressive 57 all-time highs still fresh in investors’ minds, we must reassess the current market landscape. Unlike last year, which was dominated by major technology stocks and an obsession with artificial intelligence, the narrative of 2025 is beginning to shift. We are now witnessing broader participation in the upward momentum even as the most highly valued tech companies, referred to as the “Magnificent 7,” are showing signs of stagnation.

Market Breadth: The Key Indicator

Simon Ree, a trader and founder of the Tao of Trading options academy, presents an optimistic outlook despite prevailing uncertainties in the tech sector. In his recent commentary, Ree underscores a significant trend: this is not merely a “10-stock show.” He emphasizes the importance of market breadth, which indicates the number of advancing stocks versus those that are declining within an index. Ree’s analysis reveals that while the S&P 500 is reaching new heights, the equal-weight S&P 500 index is lagging. Notably, only **53%** of stocks are trading above their **50-day moving average**—a metric that can reveal future profit potential.

Ree highlights that the advance-decline line, which is a key breadth indicator, has also hit a record high recently. This suggests that there is more participation in the rally than meets the eye. Notably, he points out that the percentage of stocks above their **50-day average** typically peaks around **70%**, indicating that the current laggards still have ample time to catch up. His conclusion is clear: **”Bullish, not bearish.”**

Technology Sector’s Shifts and Emerging Opportunities

The traditional heavyweight tech stocks are feeling the constraints of market consolidation, particularly as an ETF that tracks the equal-weighted Nasdaq-100 (QQQE) is outperforming the market-cap weighted QQQ. It appears that the major tech companies are treading water together, while mid-cap tech stocks are beginning to gain traction. Ree’s observations suggest a burgeoning breadth where it truly matters. He encourages investors to look beyond the heavyweights and to focus on breadth indicators—this is where new opportunity may lie.

As a follow-up to his analysis, Ree comments on the stocks that have been making headway in this market environment. Specifically, the stocks leading the charge over the past month are the constituents of ETFs like [VanEck Social Sentiment BUZZ](https://www.vaneck.com), which targets stocks that have captured positive investor sentiment, and [VanEck Innovator IB 50 FFTY](https://www.vaneck.com). These ETFs have recently garnered attention, owing to their overlooked potential from the “Magnificent 7.”

The VanEck BUZZ ETF focuses on stocks such as Super Micro (SMCI), Palantir (PLTR), Hims & Hers Health (HIMS), Ast SpaceMobile (ASTS), and Meta Platforms (META) as its top holdings. Meanwhile, the Innovator IB fund seeks out companies characterized by strong profit growth, solid sales figures, wide profit margins, and a high return on equity, with top holdings in Hims & Hers Health, GRAIL (GRAL), Sprout Farmers (SFM), Doximity (DOCS), and Celestica (CA:CLS).

Conclusion: Strategy for Investors

In light of these developments, it’s crucial for investors to recalibrate their strategies. As the market reaches peaks and some traditional giants fade in their influence, a rich landscape of opportunity reveals itself in innovative stocks and mid-cap firms. The take-home message, underscored by Simon Ree’s insightful analysis, is to not fall prey to complacency about the usual suspects.

Rather than fixating solely on the mega-cap tech stocks and their performance, dip your toes into the waters of breadth indicators. Profit potential may be lurking in the less obvious spaces, and the market’s evolution may reward those with the foresight to look elsewhere. As conservatives focused on ensuring sustained economic growth, we champion the value of strategic investment decisions backed by thorough analysis and a commitment to traditional financial principles. Stick to your convictions and keep your eyes open—opportunity awaits.