There’s a ‘monstrous bull market’ developing under the surface of the S&P 500. This hedge-fund manager tells you where it’s at.

The S&P 500's headline level can mask what is happening beneath it. According to a hedge-fund manager cited in the report, the index may trade in a narrow range because its largest, most heavily weighted constituents are lagging — yet a "monstrous bull market" is forming among other stocks in the benchmark.

This distinction matters because the S&P 500 is weighted by market capitalization, meaning a handful of mega-cap names can dominate index performance. When those leaders stall, the index can look subdued even while a broad set of smaller constituents is rising. In that environment, headline returns may understate the strength of the average stock.

For observers, the key question is whether that participation broadens or fades. Sustained gains across a wider group of companies would suggest the rally rests on a sturdier base than a few giants alone. A narrowing back toward the largest names would send the opposite signal.