The overall S&P 500 gained 0.4 percent in September, but the average stock in the index actually fell 0.06 percent last month, according to data from Bespoke Investment Group. The main index is market-cap weighted, so bigger stocks have a bigger influence on the index.
“This is a result of the largest stocks in the S&P performing better than the smaller stocks in the index in September,” Bespoke said in a note.
Microsoft and Exxon Mobil, two of the largest stocks in the S&P 500, rose last month 1.8 percent and 6.1 percent, respectively. Meanwhile, Stericycle — which is the smallest stock in the index — fell 4.9 percent last month.
At the same time, the 10-day average of stocks making new 52-week highs at the New York Stock Exchange is below 100, said Andrew Thrasher, portfolio manager for The Financial Enhancement Group and founder of Thrasher Analyitics. The technical analyst noted this has happened just three other times: in at the lows of the financial crisis in 2009, in 2013 and in 2014.
The recent rally in stocks has also been limited to the large-cap indexes, leaving small-cap stocks behind. The Russell 2000, which is made up of small-cap stocks, has not made a new record since Aug. 31. Since then, the index has fallen about 4 percent, while the Dow and S&P 500 are up 3.7 percent and 1.2 percent, respectively.
Small caps initially left their large-cap counterparts in the dust earlier this year, as investor poured money into companies with lower overseas exposure amid growing fears of a global trade war. These fears have dissipated recently, however, as the U.S. signed trade deals with Mexico and Canada.