Fu Peng: US stock internal pullback divergence hits critical point; heavyweight stocks' catch-up decline may trigger volatility spike

PANews, October 20 - Fu Peng posted on X stating that heavyweight stocks remain elevated under the support of passive funds and concentrated holdings, making the broad index appear stable, but most individual stocks are undergoing deeper technical pullbacks. He pointed out that when the pullback divergence between the S&P 500 equal-weight index and the market-cap-weighted index widens to the historical extreme range of 4%-6%, it often means market breadth is approaching its limit; at this point, even a small catch-up decline in heavyweight giants could trigger a sharp spike in the VIX volatility index. Fu Peng believes that this pullback divergence has recently reached a critical point, and the internal market imbalance is being corrected as volatility rises.