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>5 Charts Expose Troubling Weaknesses In Record-High Stock Market: 'This Is Not Normal'
>As the S&P 500 and Nasdaq 100 indices continue to notch new all-time highs, it’s clear that the rising tide has not lifted all boats.
>Sharp-eyed analysts and investors have noted some discordant features in a stock market at its peak, raising questions about the euphoria that currently reigns supreme on Wall Street.
>David Morrison, senior market Analyst at Trade Nation, commented, “There are concerns about the US market's lack of breadth with so much of the overall performance concentrated in the stock price of a few corporations. In fact, the five biggest companies by market capitalization in the S&P 500 account for nearly 30% of its value. The size and outperformance of this select group is reflected in its valuation, which is way above that of the rest of the constituents.”
>The current bull market rally lacks broad participation, with only a few companies driving the major indices higher.
>The cap-weighted S&P 500 Index, tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY), has surged to levels last seen in November 2008 when compared to its equally-weighted counterpart, represented by the Invesco S&P 500 Equal Weight ETF (NYSE:RSP).
>SentimenTrader in a post on social media X, indicates that while the Nasdaq 100 continues to achieve record highs, many of its constituent stocks are underperforming, dropping to monthly, quarterly, or even yearly lows and falling below their 10-, 50-, and 200-day moving averages.
>“This is not normal. In fact, it’s never happened before to this degree. There is a possibility that the average stock will catch up to the index, that is not how things usually pan out. Almost never, in fact. Risk is high in that index,” they wrote.
