Bullish setup for OEX vs. SPX as mega caps remain unloved
Time to think contrarian bullish on mega caps
The relative ratio of the S&P 100 (mega caps) vs. the S&P 500 (large caps) or OEX/SPX hit a 15-year relative low vs. the SPX in April. However, the massive falling or bullish wedge for OEX/SPX from late 2008 suggests that we should become contrarian bullish on mega caps. The pattern is similar to the early-to-mid 1990s when the OEX bottomed vs. the SPX, broke out from a bullish wedge, and then outperformed into the 2000 highs. We think the OEX is on a verge of another longer-term bullish wedge breakout vs. SPX that would set up a period of outperformance for mega caps.