Stock indexes hit all-time highs with narrow leadership
The recent surge in stock indexes to all-time highs has been driven by a narrow group of stocks, primarily semiconductor companies.
This concentration of market leadership has raised concerns about market fragility. The stunning V-shaped recovery from the March 30 lows has been led by semiconductor stocks, especially memory makers.
The sharp rally of Micron, which crossed the $1 trillion market cap for the first time, accounted for 18 of the S&P 500’s 45-point gain. Only about 60% of S&P 500 stocks are trading above their 50-day moving average, indicating a potentially crowded market.
The probability of near-term profit taking or rotational activity appears to be rising as investor positioning becomes increasingly crowded.