From 6-7, Back To 3, But Down To A Different 1 | Perch Views #29

Simplifying the stock screening process for subscribers | Weather Reports to help you navigate the flyways in: Futures, Equity Indices, Stocks, Bonds, Commodities, Currencies, Crypto | Disclaimers

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This is the previous Perch Views article, from below the paywall line in I Got Six-Seven Problems But The Equal Weights Ain't One | Perch Views #28:

I Got Six-Seven Problems But the Equal Weights Ain’t One

The Wall of Worry - a.k.a. The AI Bubble

Let’s review what’s happened since October when The Great Glass Elevator | Perch Views #15 was the first digital ink covering the Wall of Worry- aka the AI Bubble

Lots of talk that there’s a bubble in talking about bubbles.
Two quotes come to mind:
“When I see a bubble forming, I rush in to buy, adding fuel to the fire. That is not irrational.” — George Soros
“Bull markets climb a wall of worry; bear markets slide down a slope of hope.”
It seems there’s more worry than hope right now:

From I’m Not A Cat. I Like The Spot. | Perch Views #23:

The theme since October has been all about the wall of worry aka “The AI bubble.”

and also:

Along with Adam Mancini, Jeff deGraaf at Renaissance Macro Research is one of the best chart readers out there:
The problem with a bubble, and this is why we identified it, is usually, technically, and when I say usually, I’d say 80%, 85%, if I’m gonna have a top, if I’m gonna transition from a bull market to a bear market, it’s not gonna be a V-top. You don’t go straight up and then straight down.
The NASDAQ actually has to get to about 36,000 to be officially in a bubble, so it’s got a long way to go to officially be in a bubble.
This is NDX 36,000:

Fast forward four months, and it seems the bubble in talking about bubbles has finally popped. The market itself did just fine in 2025, and keeping an eye on the Weather Report proved fruitful:

2026’s Theme, So Far

Another 3 | Perch Views #26 was the previous update on the equal-weighted indices (RSP, QQQE) vs their cap-weighted counterparts (QQQ, SPY):

(QQQE) Nasdaq Equal Weight- On the breakout line while the Nasdaq market cap-weighted (QQQ) is still building up the levels:
vs Nasdaq (QQQ) Cap Weighted:
RSP S&P Equal Weight S&P- Broke out before the market cap-weighted (SPY):
vs S&P Cap Weighted (SPY):

Also from Another 3 | Perch Views #26:

Nvidia (NVDA) shows the gift and the curse of market cap-weighted indices. Great when the highest weightings force the indices higher. Not so great when they cause the broader market to lag relative to the equal-weight equivalents (QQQE) and (RSP).

Except for Google (GOOGL), it’s apparent that the Mag 7 are all stuck in some type of range (light blue):

Facebook (META)

Apple (AAPL)

Amazon (AMZN)

Netflix (NFLX)

Microsoft (MSFT)

Tesla (TSLA)

Nvidia (NVDA)

and Google (GOOGL)

Here’s the latest equal-weight vs market-cap indices charts:

Nasdaq (QQQ) Market Cap Weight

Nasdaq (QQQE) Equal Weight

S&P 500 (SPY) Market Cap Weight

S&P 500 (RSP) Equal Weight

690 SPY

From You put the "P" in the nice kids and a "C" in the naughty kids | Perch Views #24

The overall price action continues to show bullish signals, but failure to sustain above 690 would be the first sign of trouble for the bulls.

690 SPY (light blue) continues to show its magnetism to price, despite the equal weights (RSP, QQQE) having greater strength:

Another 3 | Perch Views #26 closed with the following:

Does the Nasdaq (QQQ) catch up with the rest of the world, or does the rest of the world catch down to the Nasdaq?

As of now, it seems 2026 is all about whether the equal-weight indices will continue to outperform versus market cap indices. If that’s true, the probabilities of distribution should also be updated:

Do the market cap indices (SPY, QQQ) catch up with the equal weights (RSP, QQQE) and the rest of the world?

My question: Will participants still complain about “concentration” even though the other 493 are the reason for market strength?

Thank You!

Full trading week this week. May the market odds be ever in your favor, and Thank You! for supporting Little Bird Trading!

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Disclaimer: Little Bird Trading and any of its associations may or may not, whether long or short, have a position in any instruments. Not investment advice. Provided for informational purposes only. Not a recommendation or endorsement. Not registered or licensed. Model portfolios are property of their respective owners. All data is sourced from publicly available information. No guarantee is being made or offered. Not responsible for financial loss or ruin.