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Largest 20 S&P 500 stocks up to 41% of the index's market cap. The most since 2000, according to NDR Research. This means there are greater chances that if a few of these stocks disappoint or outperform, the market could see strong swings in either direction. This is also a warning sign as the index gets more concentrated. Yet the capital-weighted index has largely outperformed the equal-weight as Big Tech stocks surged since the start of the year.

Global technology ETF and mutual funds had $3.768 bln worth of inflows last week, according to Goldman Sachs. From a contrarian perspective, this is particularly negative in the short-term. Adding to worries, the Nasdaq 100 is led by the strong performance of just a few stocks and is now in overbought territory, looking at the Relative Strength Indicator. 

Hopes that lawmakers are getting closer to a deal on the debt ceiling sent the Nasdaq 100 surging. And adding to the regained investor appetite is the perspective of AI adding hundreds of billions in revenues. But is the market not getting ahead of itself? The Relative Strength Indicator (RSI) is now flashing overbought signals. Just as Fed members assured investors they are not looking to cut interest rates and this afternoon Fed Chair Powell is set to speak.

“Institutional investors have been dumping stocks for the last 12 months. You have to ask yourself some serious questions when you see this." Source: WSJ. In our view this looks relatively normal as we have quite likely emerged into a new bull market since the October 2022 lows. If this is not a new bull market it would be the longest bear market since 2000, when stocks had reached extreme bubble-like valuation. This stock rally is driven by earnings, and investors view of the end  in sight of high inflation and rising interest rates. 

Oil and oil stocks traders are hesitant to buy dips (in size) due to supply and demand uncertainty. The debt-ceiling overhang may also likely be a contributing factor for what appears to be thin volumes.