Hey, Ross here:
Welcome back to a new week.
I’ve been talking about how this is the “most hated rally ever”.
And one thing that’s being brought up a lot lately, is how most of the gains seem to be concentrated in just a few stocks.
Let’s take a look.
Chart of the Day
Here’s a chart that shows how just 10 stocks contributed 69% of the S&P 500’s blazing rally since April.
On the surface, that’s a pretty scary stat.
But if we look a little deeper, here’s what we also see.
Net new highs remain strong.
And the Equal-Weight S&P 500 is on the verge of new all-time highs.
Meanwhile, institutional funds continue to flow into market.
The North American Active Investment Managers (NAAIM) Exposure Index – a measure of how invested active fund managers are in U.S. stocks – are approaching the highest levels this year.
Now, of course, despite all this…
It is still true that most of the rally’s gains since April has indeed come from just 10 stocks.
But, ironically, this can actually be a good – and perfectly natural – thing.
I explain why below.
Insight of the Day
The next leg of the rally will be driven by the stocks behind the big market leaders.
As I’ve said many times before, stocks never go up at the same pace.
The market leaders move first.
Who are the biggest market leaders of this rally?
Well, they’re the stocks in the first chart – the ones that made the largest contribution to the rally’s returns.
So, yes, the rally may be a little “concentrated”.
But I’m not too worried.
As I showed above, more and more stocks continue to high new highs – not just the big names.
And it means the NEXT leg of the rally will likely be driven by the group behind these market leaders…
Smaller stocks that can’t move the index as much…
That don’t get mentioned in the news…
But are still racing upward.
Those are the setups I’m interested in trading.
I’ll be sharing my #1 strategy for doing that tomorrow morning.
But for today, you need to know about America’s $12 billion “injection” into a major crisis…
And the 3 stocks that could explode as a result.
Customer Story of the Day
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Ross Givens
Editor, Stock Surge Daily
