The S&P and Nasdaq hit all time highs again today. Led by megacaps….and that is about it. There were twice as many new monthly lows as new monthly highs, but 3X more capitalized new monthly highs than new lows. The big guys are pushing the market up and everyone else is falling behind.
The rolling 52 week NHNL turned negative today. It is pretty likely we are going to get a healthy pullback soon. Which is good, because we need one!
IF the market continues to go up. It will likely have to rely on the mega cap stocks. This scenario took place in the spring of 2024 where the market pressed higher for weeks even though the NHNL was either neutral or negative. I had never seen that before. With how strongly the market skews with a handful of stocks, it is certainly possible. Here is the current top 10 stocks be market weight. These 10 companies drive 40% of market movement!
It is also possible the rest of the market reverses and pulls up from the nosedive. That would supercharge the market for a brief time…well into overbought territory. That does not seem as likely. The Dow is still not making new highs and markets diverging from each other generally happens near tops.
The equal weighted S&P 500 is also down for the week.
All it means at this point is to be cautious. There are more reasons for the market to pull back from here than to keep moving up. As always, the market does not care about my opinion and I will have to wait and see, just like everyone else.
