The #fed started rising rates to fight inflation 15 months ago. Since then, equity market indices have traded sideways, for the most part. From March to October of last year, the market made no distinction between sectors or size; it mostly moved in unison during bear market rallies and falls. But since October, some decoupling has occurred. Large caps in the tech sector have been favored, and in fact 5 stocks have been pulling from the Nasdaq 100 and the S&P500 in detriment of small caps. The breadth is poor, concentration is high, and valuations of those companies are stretched. Average valuations don’t make much sense because the dispersion is high. History doesn’t provide good omens for these situations. A concentrated market becomes volatile and corrects until the breadth recovers normality.
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