Tom Essaye warns that most S&P 500 stocks are lagging as the index hits new highs.
S&P 500’s Gains Look Deceptive Despite 16% Yearly Rally
SPX: Two Concerning Trends to Watch as Stocks Hit New Highs
The S&P 500 slipped 0.9% last Thursday, a modest pullback given its 16.2% year-to-date gain. But according to Tom Essaye, president of Sevens Report Research, that strength is “more than a little bit deceiving.”
Of the 503 companies in the index, only 144 — or 28.6% — are outperforming, while 227 are down for the year. Essaye noted that this imbalance raises questions about how sustainable the rally really is.
He also highlighted that the NYSE Advance-Decline Line fell to a 12-week low last week, even as the S&P 500 posted 14 record closes since September — a signal that far fewer stocks are moving higher during the rally.
Essaye concluded that while concentrated leadership is normal during long market advances, current extremes suggest risks are building beneath the surface.
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