There was a wave of criticism for most of 2024 surrounding the market’s overreliance on the Mag 7 stocks.  By mid-July, the Mag 7 contributed 12% of the 19% rally seen in the S&P500. This was seen as unsustainable and potentially dangerous for the overall index should the Mag 7 fall in price.

As of July 11, the Mag 7 stocks peaked and headed lower. To the surprise of many, the index did not collapse, but instead has continued to rally higher. Investors should be encouraged that other sectors have been able to pick up the slack. In sports, your star players always need a rest and it's a strong bench that helps win championships.

The chart below illustrates the impressive heavy lifting that has been done from the remaining 493 bench players.

Since the July peak for the Mag 7, both the S&P500 and S&P500 Equal Weight Indexes have stormed higher. From July 11 to October 9th, the S&P500 added another 3.72% in gains led by Financials and Industrials. Technology was the only losing sector during that period.

For those investors who feel Technology is the only game in town, the strength of the broader index shows a rotation occurring in the markets. This is a healthy development that prolongs and improves the sustainability of the current bull market. It may also be providing an opportunity for investors to catch the technology train that they so regretfully missed.