S&P rises, but fewer companies set standard levels. Why can this be a red sign of the market

The new highlands that the S&P reaches are undermined through the company’s narrow participation in those high levels, according to a report issued on July 5 by ARI WALD, the head of technical analysis at the wealth and investment management company OPPENHEIAMEREREREREREAIMEREREREREREREREREAIMEREREREREREREREREAIMEREREREREREREREREAIMERERERERERERER & CO. And the newborn who was informed by Bloomberg. It is referred to as the breadth of the market, analysts often try to know the number of companies in a specific index or sector that participates in a gathering to measure the validity of the matter.

A father says, this is important to follow, because narrow participation can hide the weak weakness in the market: Since 1972, the S&P has published lower returns than average during the 1, 3, 6-12 months of the period when it also coincides with a high level of 100 companies in the shares in New York (NYSE) that also strikes a new analysis. In the last stage of the market, 88 companies on the New York Stock Exchange were also high.

In fact, large technology companies were drivers behind the recent market rises: only five shares –Amazon (AMZN), Broadcom (AVGO), Dead (Dead), Microsoft (MSFT), and NVIDIA (NVDA) – more than half of the S&P 500 return, according to the analysis of Adam Turnquist, the chief technical strategy of LPL Financial. It is always a source of concern when a few companies are responsible for most of the gains – because this means that these gains can easily turn into losses depending on the strength of a handful of companies. This is what happened in mid -2013, when seven moves it The gathering faded.

While the S&P 500 is less than 1 % away from the highest new level when closing on Wednesday, the average share of the S&P 500 was trading about 12 % less than 52 weeks. “The breadth is a little frustrated,” he writes. “For the context, over the past decade, the average gap between the index and the highest medium stocks for 52 weeks reached about 5 %.”

The good news, according to analysts, is that the expansion of the market may improve in recent weeks. “The stock share in the S&P 500 is higher than the moving average for 200 days. Wales Vargo Investment Institute (WFII).

Another positive mark mark: All S&P 500 sectors participated in the assembly. Haveland says he is expected to see more improvement in the broader participation as investors get more clarity in financial and commercial policies.

“Given the strong gathering, we will not be surprised by seeing some monotheism in the coming months, as the economy and profits begin to digest advanced commercial policy,” says Hafraland. “Therefore, it might be the time to restore balance.”