A few days ago, with the Nasdaq at all time highs, we showed a striking chart: barely 40% of the Nasdaq's 3,000+ stocks were trading above their 200 day moving average.

While not nearly as dramatic, a chart comparing the broader S&P and the median stock (via the Value Line Geometric) showed a similar theme: barely a handful of stocks were propelling the entire market higher, and it's also why two weeks ago we summarized the current state of affairs "They better not start selling the generals"

A few days later none other than Goldman's chief market economist David Kostin, admitted that while most S&P 500 stocks participated in the rally between November 2020 and April 2021, "market breadth has narrowed substantially in recent months." As shown in the chart below, after Goldman's Breadth Index hit its maximum level of 100 in April 2021, it has since fallen to the current near-record low level of 16.

Similarly, the S&P 500 Equal-Weighted Index outperformed the S&P 500 by 7% from November to April (25% vs. 18%) but has underperformed by 5% since (7% vs. 12%).

Goldman then calculates that just the five most popular tech names - AAPL, MSFT, NVDA, TSLA, GOOGL - have contributed 51% of S&P 500 returns since April.  After contributing over double their starting weight to the index's return, these stocks now make up 22% of the S&P 500 by market cap, a 4% increase from the start of the year.

Outside of these 5, the table below shows the 25 S&P 500 stocks that made the largest absolute contributions to the index YTD.

Why does this matter? Because as we have observed over the years and as Kostin wrote over the weekend, the amount of concentration is directly proportional to the odds of a major market shock. As Goldman further explains, one measure of market breadth that has historically carried a forward-looking signal for equity market performance compares how far the S&P 500 index and its median constituent trade from their respective 52-week highs. When the index is much closer to its 52-week high than the median stock, this breadth measure plunges and signals that a small number of stocks are driving index returns. This measure of breadth registered more than one standard deviation above average as of April 2021 (highest level since 2014) before falling by 4.5% during the subsequent six months.