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.

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