A great market divergence: Traders break down the split in the S&P 500

The big just keep getting bigger and the small smaller.

So far this year, the five largest stocks on the S&P 500 – Apple, Microsoft, Alphabet, Facebook and Amazon — have rallied double digits, but just one of the 50 smallest S&P 500 is in positive territory.

“This is a very interesting debate and I think probably the biggest question in the market right now and that is: Are the big boys going to come back to the smalls or are the smalls going to catch up to the bigs?” Joule Financial President Quint Tatro said Tuesday on CNBC’s “Trading Nation.”

While Tatro said it’s still too soon to answer that question, one lagging sector of the market does have him concerned that the mega-cap rally could lose some of its steam.

“Over history there have been some canaries in the coal mine per se,” said Tatro. “We continue to look at the financials that will not rally in this environment and that’s concerning to us. The financials should be rallying in the face of what we’re told will be a pretty significant economic rebound. Because they’re not, I am a little concerned that the bigs are getting ahead of themselves, and we’re proceeding with caution here despite how foolish that feels and seems at this time.”

The XLF financials ETF, which holds stocks such as Citigroup and Bank of America, has fallen 26% this year. By comparison, the S&P 500 is down 3%. 

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