S&P 500 hits record high by deleting every stock that fell

The S&P 500 sits near a record high while a large share of its stocks are down 20 percent, so the index committee has a fix.

Debbie Downturn3 Oct 20261 min readShorts

The S&P 500 is near a record high while many of its stocks sit in bear markets. The index committee responds by removing every stock that falls 20 percent, leaving fourteen companies and a plan to hit a record with none. Debbie Downturn hears 1929 in the pipes.

"...and frankly the losers were dragging down the average, so we asked them to leave," an index committee member told SnarkWire on Saturday. The S&P 500 is trading within 2 percentage points of its record close, which MarketWatch notes hides a market where a large share of stocks are already down 20 percent or more (the technical definition of a bear, and the informal definition of my entire career).

The committee's answer is a new rule. Any stock that falls 20 percent leaves the index the same afternoon. By Saturday's close the S&P 500 held fourteen companies, and the committee expects to post a record high with no constituents at all by the end of the month.

Traders call this "narrow breadth," meaning a handful of names carry everyone else. I call it 1929 with better fonts. The last index that tried to lose weight by amputation was the Nasdaq in March 2000, and that patient did not walk again for fifteen years.

Watch the plumbing (it is always the plumbing). When the fourteen survivors wobble, nothing sits beneath them but the removed stocks, now trading in a parking lot behind the exchange.

"An index with zero stocks cannot fall," the committee member said. "That is the strongest technical setup I have ever seen."

She is right. It cannot fall. It can only do what every record high in history has done, which is become the number they quote at the start of the documentary.