Hidden Bear Index: Is the Average Stock Worse Off Than the Index?
The S&P 500 is cap-weighted, so a few mega-caps can hold it near highs while the broad market lags. The Hidden Bear Index compares two real drawdowns: the equal-weight S&P 500 (RSP) — the average stock — and the cap-weighted S&P 500, each measured from its own 52-week high. When the average stock falls far below the index, a correction is happening beneath a calm tape.
Today's answer
Broad participationNo — large-cap participation is broad. Equal-weight RSP is 1.1 points ahead of SPY relative to their own 52-week highs. The broader listed-stock universe is weaker: the median eligible stock is 18.3% below its own high and 47% are more than 20% below theirs. The regime is Broad for 1 sessions; the RSP–SPY gap has broadened by 1.2 points over 10 sessions. Similar Broad readings since 2010 led to +3.5% average six-month SPY returns, versus +6.1% across all regimes. That is historical context and does not time entries.
Sources, methodology & freshnessLast updated 2026-08-21 · Open ↓Close ↑
Today’s breadth split
The index-level comparison and the full stock universe answer different questions. RSP shows whether participation inside the large-cap S&P 500 is keeping up with SPY; the depth profile shows how much damage is still hidden among individual listed stocks.
How far stocks sit below their own highs
A cumulative depth profile: deeper bars are subsets of the shallower ones.
Share of 5,834 eligible common stocks, measured from each stock's own 52-week high.
The average stock vs the index
Both lines are real drawdowns from each series' own 52-week high, so both reach 0% at new highs. The “average stock” is the equal-weight S&P 500 (RSP) — every member counts the same, so it isn't carried by the mega-caps. When it sinks far below the cap-weighted S&P, the index is being held up by a shrinking set of leaders.
Performance: the average stock vs the index
Total-price performance of the two, rebased to 100. When the cap-weighted S&P (slate) pulls above the equal-weight average stock (orange), the index's gains are concentrated in its largest names — the hallmark of a narrow market. Uses the investable equal-weight S&P 500 (RSP), which is survivorship-free, so the comparison is honest (an in-house equal-weight of the full universe would be inflated by survivorship).
What the S&P 500 did next — by regime, since 2010
Broad readings have been below the all-regime baseline
Six months after past Broad days, SPY averaged +3.5% versus +6.1% across all regimes. It was positive 65% of the time versus 80% overall. The 2.6-point return difference is historical context, not a forecast.
| Regime | Days (n) | SPY +1m | SPY +3m | SPY +6m | +6m win% |
|---|---|---|---|---|---|
| Broad(today) | 364 | +0.1% | +1.0% | +3.5% | 65% |
| Hidden Bear | 454 | +1.5% | +4.1% | +9.6% | 93% |
| Washout | 72 | +8.5% | +15.3% | +22.8% | 100% |
| Mixed | 2918 | +0.9% | +2.9% | +5.5% | 79% |
Forward returns use SPY closes ~21 / 63 / 126 trading days after every day classified into each regime since 2010. Read as regime context, not a trigger — counterintuitively the beaten-down states (Washout, then Hidden Bear, where the average stock is lagging) preceded the strongest forward returns as the broad market mean-reverted, while Broad participation — already strong — was the most muted. Daily observations overlap, so they are not independent; the Washout sample is also small and survivorship-flattered.
How Hidden Bear Index Works
- 1Take the "average stock" as the equal-weight S&P 500 (RSP)We use the investable equal-weight S&P 500 (the RSP ETF) as the average stock — every member counts the same, so it reflects the typical large-cap name rather than the mega-caps that dominate the cap-weighted index. RSP is a real, survivorship-free index that makes new highs and falls into genuine drawdowns (an in-house equal-weight of the full universe would be inflated by survivorship, so we avoid it for performance).
- 2Measure both drawdowns from their own 52-week highsWe take RSP's drawdown from its trailing-252-day high and the S&P 500's (SPY) from its own. Both are real series that touch 0% at new highs and deepen in selloffs, so they are directly comparable. A rebased performance overlay shows their return divergence over the window.
- 3Compare them — the "hidden bear" gapThe gap is the average stock's drawdown minus the S&P's. A large negative gap means the average stock is far worse off than the headline index — the index is being carried by a shrinking set of leaders while the broad market corrects quietly. A positive gap means broad participation: the average stock is keeping up with or ahead of the index.
- 4Read the regime, the dispersion, and what came nextA rule labels the market Broad (average stock keeping up), Hidden Bear (index calm but the average stock lagging), Washout (both deeply down), or Mixed. We also surface the full-universe dispersion — the median individual stock's distance from its own 52-week high and the share of stocks 10/20/30% below theirs — and what the S&P 500 did over the following 1, 3 and 6 months from each regime since 2010.