Mott Capital Warns of S&P 500 Underperformance

Michael Kramer, founder of Mott Capital Management, warns that the S&P 500 is entering a period of underperformance. He identifies a triple-top reversal chart pattern as a primary indicator of this shift.

Kramer based his analysis on the ratio between the market-cap-weighted SPDR S&P 500 ETF and the Invesco S&P 500 Equal Weight ETF. He suggests that megacap technology stocks, which previously drove market gains, are now positioned to lead the index lower. This outlook is supported by a widening gap between the S&P 500 and other benchmarks, such as the Dow Jones Industrial Average, which indicates a shift in market breadth.

Additionally, Kramer notes that implied correlations have remained historically low since January 2023. He argues that these correlations may rise if technology stocks begin to lag while the broader market remains stable, a trend he characterizes as a typically bearish feature.