The market is broadening without damage to the headline index, which is a win — 71% of S&P stocks are above their 200-day moving average, and the equal-weight index is up while the AI-heavy space is down.
Yurion argues that the current broadening of the bull market is healthy because it's happening without the headline S&P 500 declining — a classic sign of a sustainable rally rather than a late-cycle top. ✦ AI generated
Yurion Timmer · The Compound · 2026-07-20 · original ↗
starts at this moment · 3:00
“The MAG7 stocks are finally underperforming. The bull market is now broadening out. Is this good news for the stock market or late cycle behavior?”
right now the market is broadening without really any loss to the headline index. And just to give you an example, since June 2nd, the S&P has not made a new high. It's down about half a percent. Which is really not a big deal, of course. Um, but the uh the AI space within the S&P is down 15%. The Cosby index in Korea is down 22%. uh the equal weighted index is up two and the X ai space within the S&P is up five. So uh and 71% of stocks in the S&P are above their 200 day moving average.
verbatim transcript · starts at 3:00
2:43The MAG7 stocks are finally underperforming. The bull market is now broadening out. Is this good news for the stock market or late cycle behavior? All right. And we got we'll start with a uh we got a good chart for you. We can start with uh throw the chart up there. Let's do a chart on here. This is from your weekly newsletter. uh you show the S&P 500 against the equal weight and the
3:04equal weight is kind of breaking out a little bit and playing catch-up from the past I don't know five years or so. Um so the bull market is broadening. Is this is this a good thing for the bull market? >> Um it is and so far the broadening actually is happening uh in the best way possible. So you asked about the MAG 7. you know, we we've been in a secular
3:28bull market now by my count at least since 2009. And so investors have had a very nice long period of uh I guess I would call it over earning beta. Um because historically the market goes up 10 11% but for the last 17 years it's gone up about 17 18%. So it's been a a great boom of course and for many many years um the the the mag 7 before that the
3:54fangs were really the driving force of that it was really a a mega cap growth story in the US and if you were anywhere out outside of that particular style box uh you were not participating uh as much as you know as as as you might have been able to and so what we're seeing now is that the mag seven are are kind of losing their their mojo. You know, they
4:20haven't really made a consistent new high since last October. Um the relative performance against the S&P um has been actually making lower highs and lower lows. And for me, the most important metric, which is the payout ratio. So we think about earnings, of course, earnings are the top line or the or the bottom line, but the payout of those earnings. So how much of those earnings are returned to shareholders as
4:46dividends or buybacks is really the the the the engine that has drive that has been driving this bull market. And the payout ratio for the S&P used to be like 95% it's now down to 68%. And it's a familiar story of course because companies are spending so much on capex because of the AI buildout that there is no money left essentially for buybacks. And that's not necessarily a bad thing,