The Stock Market Is Flashing a Warning Sign We Haven't Seen Since 2000. History Says Investors Should Do This Now.

The S&P 500 (^GSPC -0.32%) has spent most of 2026 at or near record highs. While that’s been good news for anyone invested in the index, a problem is developing beneath the surface.

As of Oct. 5, the S&P 500 was trading at less than 1% below its all-time high, yet only 42% of its components were trading above their 200-day moving average. According to Dow Jones Market Data, the last time the S&P 500 was within 1% of a record high while more than half of its stocks traded below their 200-day moving averages was March 2000.

Clearly, no one likes to see comparisons to the peak of the tech bubble. But this isn’t a signal to sell stocks. Rather, it’s time to rethink what you’re actually owning when you buy the S&P 500.

What’s happening within the S&P 500 right now

Obviously, the S&P 500 is historically top-heavy right now. Tech stocks account for roughly 38% of the index, while the top 10 holdings also account for approximately 38%.

For most of the past few years, that hasn’t mattered to investors because those mega-cap names have been among the market’s best performers. However, it shows that what’s happening right now isn’t a broad market advance, and that usually means trouble for bull market sustainability.

As it stands, tech and energy are the only two sectors outperforming the S&P 500 year to date. The other nine S&P 500 sectors are all lagging the index. Financials, utilities, communication services, and consumer discretionary are all negative for the year.

When just a handful of stocks are pulling a 500-stock index higher, it becomes highly vulnerable to a pullback if tech momentum begins to cool. This might not be a bad time to rethink the index and equal-weight it instead.

Why the equal-weight S&P 500 makes sense

The Invesco S&P 500 Equal Weight ETF (RSP -0.68%) owns all of the index’s stocks, but only in 0.2% weights at the time of rebalance.

Tech still accounts for around 16% of the portfolio, but it’s one of five sectors allocated at least 9%. It’s a much broader way to invest in the index and reduces the downside risk exposure of being overweight in just a few tech stocks.

Plus, there’s an inherent “buy low, sell high” mechanism built into it because it rebalances quarterly. The Invesco S&P 500 Equal Weight ETF can help reduce concentration and downside risks, while positioning investors for a long-term broadening of the bull market.

For long-term investors, selling the S&P 500 in a narrowing market isn’t the answer. Rebuilding your exposure to it might be the better solution.