Market Concentration Is Real, But This Is a Healthy Market
You've been hearing for a while now that the biggest stocks are the ones driving the S&P 500 Index higher...
That's true.
Stocks like Microsoft (MSFT), Apple (AAPL), and Nvidia (NVDA) have posted monster returns over the past year or so. Since the S&P 500 is weighted by market capitalization, moves in these tech giants can lift the index.
To see how Big Tech has been driving this market, take a look at the chart below.
It shows the S&P 500 divided by the S&P 500 Equal Weight Index (where all stocks in the index have the same weighting). The higher the ratio, the more market gains are concentrated among the big players. And as you can see, this ratio is hitting a decade-plus high today...
It's important to point out that we're a long way from the peak seen back in 2000 during the dot-com boom. That was a time when just a few tech companies drove nearly all the gains... while most other stocks weren't doing great.
This tells me (Jeff Havenstein) that we're not at an extreme level in the market just yet. Big Tech stocks have plenty more room to move higher before it's panic time.
Simply put, this is still a healthy market...
To prove that, just take a look at the "advance/decline" line below.
Longtime readers are familiar with this measure... You take the number of stocks that went up on a given day and subtract the number that went down. If more went up that day, the line goes up. If more went down, the line goes down.
In a typical bull market, as the market goes up, the advance/decline line goes up, too. When the advance/decline line moves lower while the market continues to go up, then it's time to worry. It means the gains are concentrated in only a few companies.
We saw this in the early 2000s before the tech bubble burst.
But we're not seeing that today. In fact, the advance/decline line for the S&P 500 is currently at new highs. Take a look...
We're also seeing the advance/decline line for all stocks on the New York Stock Exchange near all-time highs.
So the headlines are correct that the biggest stocks in the market are driving a good chunk of the gains. But other smaller stocks are doing well, too.
The small-cap Russell 2000 Index has even rallied to new all-time highs recently...
Again, these are all signs of a healthy market.
As I wrote last week, this bull market could have a long life ahead of it.
Stay long.
Of course, to fully exploit the coming gains in this bull market, you need to know which companies to add to your portfolio. That's where our friend Gabe Marshank comes in.
A former hedge-fund manager who spent two decades handling hundreds of millions of dollars for Wall Street legends like Steve Cohen and David Einhorn, Gabe is now bringing his expertise to everyday investors.
Specifically, he's looking to find the kind of setups that Wall Street often ignores until it's too late – after the biggest gains have already been made. His secret is focusing on smaller, overlooked companies with powerful catalysts and limited downside. With this method, he has helped quietly uncover 18 triple-digit winners over the past few years.
Now, he's revealing his latest discovery... a small quantum-computing stock that could lead the next wave of technological disruption.
Gabe will cover all the details of this little-known player in an online event next Wednesday, October 29. Just for tuning in, you'll get the name and ticker of this stock for free.
You can sign up and get all the details here.
What We're Reading...
- In case you missed it: "Happy Birthday, Bull Market... And Here's to a Couple More."
- The S&P 500 churns as investors assess a mixed earnings scorecard.
- Something different: NBA 2025-26 season preview: Schedule, key storylines, and how to watch the basketball action live.
Here's to our health, wealth, and a great retirement,
Jeff Havenstein
October 22, 2025