“The U.S. stock market is firing on all cylinders, and that’s bullish for its near-term prospects,” Mark Hulbert writes for MarketWatch. “The five largest U.S. stocks by market capitalization are grabbing attention, but their performance doesn’t tell the whole story.”
These five — Microsoft, Apple, Amazon.com, Alphabet, and Facebook — currently represent 20% of the S&P 500’s total market cap. That’s the highest concentration since at least 1980.
Also significant is that 94% of S&P 500 stocks now trade above their 50-day moving average (according to FactSet). Moreover, most stocks are not only in uptrends, the uptrends are accelerating. For stocks listed on the NYSE, 90% are now trading above their 20-day exponential moving averages, according to Hayes Martin, president of Market Extremes, an investment consulting firm that focuses on major market turning points. “That’s about as high as it ever gets,” he said.
These indications are bullish because major market turning points usually are accompanied by significant divergences in the market… divergences can materialize fairly quickly, and the bulls should not become complacent… Yet at the moment, Martin says the market’s strength is impressive and its near-term prospects are promising.