How Long Can Everyone Else Hold the Market Up?

How Long Can Everyone Else Hold the Market Up? 

Dan Russo, CMT 
March 2, 2026 

For the past few weeks, we’ve been highlighting the fact that the S&P 500 is not breaking down despite weakness in Mag 7 type stocks. This resilience has largely been driven by strength in the “other 493” stocks within the index. In addition, we’ve seen better performance from small caps (S&P 600) this year, along with continued strength outside the United States. 

The big question for investors is simple: how long can everyone else hold the market up? 

S&P 500 and NYSE Advance/Decline Line 

As we’ve noted, the S&P 500 has made little progress since the week of Halloween 2025. That’s perfectly normal following a strong advance like the one off the April 2025 lows. Perhaps the index is simply giving its rising 60-week moving average time to catch up. 

What’s notable, however, is what’s happening beneath the surface. The NYSE Advance/Decline Line made another new high last week—this time an all-time high—which speaks to broad participation across the market. 

Source: Optuma 

Seasonality 

The S&P 500 closed lower in February, preserving that month’s reputation for modest weakness. We now enter March, which has historically been a stronger month. 

To be clear, seasonality alone is never a reason to make major portfolio changes. Instead, it can act as a potential tailwind—particularly if the Mag 7 stocks begin to reengage alongside the broader market. 

Source: Optuma 

Small Caps 

In his Beltway Brief last week, Shawn Snyder highlighted recent strength in small cap stocks. Looking at the S&P 600, small caps are trading near record levels and have been outperforming the S&P 500 since November. 

From a strategic perspective, this remains an under owned pocket of the equity market—especially after years of underperformance and sustained passive flows into large cap indices. 

Source: Optuma 

International Developed Markets 

We’ve spent a lot of time discussing the rest of the world—and for good reason. It’s strong, and it remains strong. The iShares MSCI ACWI ex U.S. Index Fund (ACWX) made another new high last week. At the same time, its performance relative to the S&P 500 also reached a new high after bottoming in early 2025. 

To be fair, this is no longer “unknown news.” Members of the Potomac team attended different conferences last week, and international outperformance versus the U.S. was a widely discussed theme. 

Source: Optuma 

Emerging Markets 

While we’ve focused heavily on developed international markets, Emerging Markets also deserve attention. The Vanguard FTSE Emerging Markets ETF (VWO) traded at a new high last week and remains well above its rising 40-week moving average. 

Source: Optuma 

Final Thoughts 

So far, everyone else has been doing the heavy lifting for the S&P 500. Breadth is strong, small caps are participating, and international markets continue to lead. That’s all constructive—and it explains why the market has held together despite weakness in the largest weights. 

The question is one of sustainability. The sectors that house the Mag 7—Information Technology, Communication Services, and Consumer Discretionary—account for more than 50% of the index. That’s a lot of weight to carry. 

We are really asking a lot from groups such as Materials and Utilities at less than 5% combined. At some point, the heavyweights either need to reengage, or the market will feel the strain. For now, the support system is working. We’ll stay focused on whether it continues to hold. 

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Standard disclosures.