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What just happened?
Seriously, can we pause on it for a second.
Three weeks ago I was staring at a sea of red on my screen, squinting for pockets of green.
Tech looked horrible and the entire market looked ready for a further decline.
But the past few weeks are a reminder of just how fast things can change.
Ben said it best in his recent blog post: everything is faster now.
Today I brought along three charts that help explain why, in my opinion, the market is healthier today vs the last time we were at new highs.
Let’s begin.
1/ Mag 7 Weight vs S&P 500 Price
The Mag 7’s weight in the S&P 500 since July, 2024 is unchanged and yet the index has rallied 28%.
If you think “we need the Mag 7” in order for the S&P 500 to rally, the picture below would suggest otherwise.
The rest of the market is pulling its weight.
2/ The gap between tech’s price and forward PE drawdown is the widest its been in nearly 20 years of data.
This one shocked me.
Below you’re looking at the 52-week drawdown in the S&P 500 technology sector price (dark blue line) vs the 52-week drawdown in the forward PE (light blue line).
The lines typically move together. Makes sense, right? But look at the recent divergence.
The tech sector is currently in a 2% drawdown from 52-week highs, but the multiple is off a whopping 28%.
See the 26% spread in the bottom pane? That’s the largest spread I can find going back to 2007.
The only way tech is nearing an all time high with the forward multiple in a 28% drawdown is because the forward earnings are ripping higher.
That feels healthy to me.
3/ Tech Forward PE Ratio vs the 200D Moving Average of its Forward PE Ratio
I’ve never run the 200 day moving average on a valuation metric. Chat, does it even make sense to do this? No? Oh well, too late. Already did it. Here we go.
Below you’re looking at tech’s forward PE (the light blue line) vs the 200 day moving average of its forward PE (the dark blue, dotted line).
You see the bars on the way bottom? That’s the spread between tech’s forward PE (spot) vs the 200D moving average of the forward PE.
When the current forward PE is above the average forward PE of the previous 200 days, the bars on the bottom are black.
When the current forward PE is below the average forward PE of the previous 200 days, the bars on the bottom are red.
I used the absolute value instead of showing negatives to make it look like a “volume chart.” I haven’t seen it done that way and wanted to try it out for you guys.
On 3/30/2026, tech’s forward PE traded 8.2 points lower than its average forward PE over the preceding 200 trading days.
That’s a rapid de-rating, the exact “valuation shake out” you’d want to see for the market continue its resumption higher.
Healthy to me!
Thank you, as always, for reading!