Market Analysis: S&P 500. Historical Imbalance, And Why It Is Dangerous


E-mini S&P 500 futures are near 2023 highs. At the same time, the daily chart of the E-mini S&P 500 shows that the current price of the futures has consolidated above a series of lower peaks 1→2→3→4, which is a bullish sign.

However, WSJ analysts draw attention to an important detail — too much dependence of the growth of the index on the strong behavior of a very small number of stocks. We are talking about Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia. Their share in the index capitalization is about 30%, although at the beginning of the year it was about 20%.

E-mini S&P 500 futures are up 12% since the start of the year as these strong tech stocks carry more weight in the index. But if you calculate the dynamics of the index so that each share included in it will have an equal weight, then the growth will be less than 2%. This is the largest imbalance on record (since 1990).

The danger is vulnerability: if the bullish trend, which affects a narrow circle of leaders in one sector, ends or changes to a bearish one, this will create conditions for a fall in the values of the broad stock market index. As an example, this could be seen in September 2020, when the E-mini S&P 500 price fell by 10% in just 3 weeks due to a decline in technology stock prices.

To what extent are the fears justified in the current situation? Perhaps the next two resistance levels (psychological 4,300 and top #3) will help provide an answer.

Trade global index CFDs with zero commission and tight spreads. Open your FXOpen account now or learn more about trading index CFDs with FXOpen.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Latest from Indices

European Stock Markets on All-Time Roll Despite Economic Bleakness Nvidia's Successes Helps S&P 500 Price Reach Its All-time High S&P 500 Inches Down After Long Rally as FOMC Minutes Approach NASDAQ Price Declining Ahead of NVDA Report News about US Inflation Shake Markets

Latest articles

Forex Analysis

USD/JPY Technical Analysis: Yen Strengthens after Comments from Japanese Officials

This week has raised alarm bells for USD/JPY market participants who are trading the bullish momentum that has been going on since early 2024 (shown in the blue curved lines on the USD/JPY chart): → Vice Finance Minister Masato

Forex Analysis

The American Currency Resumes Its Growth

The American currency, despite a rather multidirectional fundamental data, resumes growth at the end of February. In the main currency pairs, one can observe both rebounds from key levels and continuation of the main trends. Thus, the USD/CAD pair


BTC/USD Price Exceeds $60,000 Per Coin

Several factors contributed to this: → Effect associated with the approval of Bitcoin ETF. The media writes that investments in these financial instruments amount to about 9k bitcoins per day, and miners produce only 900 bitcoins per day. The total investment

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65.68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.