The S&P 500 is hovering near a record, but Michael Burry is struggling to dismiss a warning from fellow market bear Peter Schiff that the strength may be masking weakness underneath.

Schiff recently pointed out on Substack that while the S&P 500 was just 0.7% below its record, 430 of its stocks were, on average, 21.7% below their individual highs. He compared the divergence with market conditions seen in 1973 and 1999-2000, when the S&P 500 subsequently suffered major declines. Burry responded that he would "like to disagree with the implication" but "cannot."

The warning comes as rising Treasury yields add another potential pressure point. The 10-year Treasury yield climbed to 5.23% on Monday, its highest level since 2007, while traders have sharply increased bets on an October Federal Reserve rate hike.

The divergence has put several parts of the ETF market in focus:

• Invesco S&P 500 Equal Weight ETF (NYSE:RSP): RSP may be the most direct ETF expression of the breadth debate. Unlike SPY, which weights companies by market capitalization, RSP gives the S&P 500 constituents roughly equal representation. That matters when a handful of mega-cap stocks are doing much of the index's heavy lifting. RSP has 510 holdings, with its 10 largest positions accounting for only about 2.7% of assets.

• Vanguard Value ETF (NYSE:VTV): If investors begin rotating away from expensive growth stocks, VTV provides a way to examine the value side of the market. The ETF offers exposure to large-cap U.S. value stocks, making it a useful counterpoint to the mega-cap growth concentration highlighted by Burry.

• Invesco S&P 500 Low Volatility ETF (NYSE:SPLV): SPLV focuses on the 100 least volatile stocks in the S&P 500 based on historical volatility. That makes it relevant to a market where investors are increasingly focused on whether index-level gains are masking deteriorating participation.

• Invesco QQQ Trust (NASDAQ:QQQ): QQQ represents the other side of the debate. The Nasdaq-100 tracker has led the major index ETFs in the supplied September data, gaining 2.9%, while its top 10 holdings account for nearly 47% of the fund. That concentration is precisely why QQQ remains central to the Burry argument. He recently described the Nasdaq 100 as historically overvalued and top-heavy and said he had shifted several short positions into put options as he warned the AI bubble could burst sooner than later.

• iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT): TLT represents the rate-sensitive side of the equation. The ETF has fallen sharply as long-term yields climbed, with its price down about 5% from the end of August through Sep. 28.

What's Next

UBS noted that the 10-year yield's current move above its one-year average is unusually rare, according to MarketWatch. In the seven previous instances since 1985, the S&P 500 was flat on average over the following three months but gained 5%-10% over six to 12 months.

With the October Fed meeting approaching and markets pricing a roughly 70% chance of a hike, the relationship between yields and equities could become an increasingly important ETF theme.

The takeaway is that Burry's agreement with Schiff does not establish that the S&P 500 is headed for a crash. But it highlights a measurable disconnect between index performance and individual-stock participation. For ETF investors, that makes equal-weight exposure, value, low-volatility strategies, mega-cap growth and long-duration Treasuries five distinct ways to frame the same market debate.