Something interesting is happening...

On a relative basis, the S&P 500 is near all-time highs vs. the equal-weight S&P 500 (SPY/RSP), highlighting the strength of mega-cap stocks in this market.

Why is this important?

Look at the correlation between:

🔵 SPY/RSP

🟢 Dow Jones $DIA

It's not perfect, but the conclusion here is fairly clear...

They tend to move in the same direction.

Like all correlations, they can deviate from each other.

In fact, the last time they deviated like this was in the 2nd half of 2022, when:

SPY/RSP 📈

Dow Jones 📉

What this tells me is that we have firm evidence of mega-cap outperformance during corrective phases within this bull market.

So if we're going to enter a deeper/longer corrective phase, then I want to continue to own mega-caps!

If/when that corrective phases ends, I still believe, based on this chart, that mega-caps are going to continue to provide upside alpha in a bull market environment.

The takeaway is simple: mega-caps = alpha.

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