Only a few stocks are fueling the rise in the market. Watch out.

As the S&P 500 falls into positive territory again throughout the year, investors need to be mindful of the fact that a handful of stocks appear to be doing much of the heavy lifting.

The benchmark market index rose 1.3% in 2020 through Monday’s close, but much of that profit is based on the moves of tech giants like (ticker: AMZN), which have released large Gains amid Covid-19 crashes that have prolonged sales at many companies.

“The ‘Big-5s’ dominate things in ways we haven’t seen in decades, and in some cases never,” wrote Jonathan Krinsky, chief market technician at Bay Crest Partners in a note Monday night. “If and when they start to fail, then ‘the market’ will have problems and other major ones.”

That trend continued on Monday when the shares had enough day. Well, some of them did.

Tech compound Nasdaq Heavy soared 2.5% to a record close, but only half of its components were positive during the day. This kind of breadth has drawn comparisons to the tech bubble of the late 1990s and early 2000s. The S&P 500 Index rose 0.8% on Monday, but close to 70% of its components closed. This action was led by large technology giants such as Amazon, which earned $ 234.87, or 7.9%.

The SPX forward / down line, a technical analysis indicator that measures all the stocks in the index that are advancing subtracted by those that are declining every day, was negative on Monday.

That would be the worst ‘breadth’ reading for any day the S&P 500 rose 0.84% ​​or more, Krinsky wrote, citing data dating back to 1996. If you are a half-full investor, Monday was the best performance for the index on a day when the number was negative 147 or worse.

The only other times in your data set when the S&P 500 index closed green while the forward-decline line was negative 147 or worse was during the period 1998-2000. “Even then, most days were marginally positive. , less than 20 bp, “he wrote.

Krinsky points out what he calls “The Paradox of Amplitude”. “From a purely mathematical point of view, the wider the amplitude, the less important the performance of the index will be on the road,” he wrote.

For the S&P 500, the top five stocks are Apple (AAPL), Microsoft (MSFT), Amazon, Facebook (FB), and Google’s parent Alphabet (GOOGL). They constitute 21.77% of the index. The more those five earn in market capitalization, the more power their movements will have over the movements of the index.

Certainly, such a divergence between the movements of the index and the performance of its participants does not mean that the market is at its peak. Although all market tops are preceded by such divergence, not all wide divergences precede market tops, Krinsky notes.

Still, there are reasons to be a little concerned, if the Big Five can’t keep things going. Looking at Apple, specifically, it is roughly 34% above its 200-day moving average, he notes. Since 2012, it was previously only above the 30% threshold last January, before its earnings report at the end of the month. There is a crucial caveat, given that a global pandemic did not affect stocks in any other year. But Krinsky believes that much of the good earnings news is already included in the stock price. He sees a similar setup for Microsoft, which reports the results on Wednesday.

That doesn’t mean you have to bet everything against the market. “There are names below the surface that continue to shape, so we will focus on them while keeping a close eye on everything else,” he wrote.

He pointed out the technical configurations for Advanced Micro Devices (AMD) Broadcom (AVGO), Skyworks Solutions (SWKS), Xilinx (XLNX) and Glu Mobile (GLUU).

Late Tuesday morning, shares of Apple, Amazon, Microsoft and Facebook fell. The S&P 500 rose 0.7%. Go figure.

Write Connor Smith at [email protected]