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Tuesday, May 30, 2023

How poor the market breadth is!

 

 While the market has pushing up quite nicely for now and it certainly appears very possible that SPX wants to challenge the 4300 soon, it has become an increasingly a warning sign that the underlying breadth is diverging and trending down.

 


 Tech stocks have had an outstanding year, especially the big ones. According to Bloomberg calculations, a handful have accounted for all the gains this year in an index mimicking the S&P 500.

The table below shows, in descending order, how many points and percentages of the index's move were accounted for by the top stocks. If Amazon is included as a "tech" stock, they more than make up the index's total gain for the year.  

The million dollar question is whether this bullish trend is sustainable. For sure the chance of a major crash is unlikely for the moment, but the upside potential is also limited as well when the breadth is poor. I highly doubt we will see much above 4300 even if we get there.

 



 

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