Fu Peng, chief economist at New Huo Group, said on Oct. 20 that the current U.S. equity market, represented by the S&P 500, shows a clear combination of market-cap concentration and severe divergence in market breadth. According to his remarks, heavyweight blue-chip stocks have kept broad indexes looking calm with support from passive flows and crowded positioning, while most stocks across the market have already gone through deeper technical pullbacks. He said market breadth is now close to an extreme threshold, and the suppression in volatility could break at any time. The comments point to a gap between index-level resilience and weakness beneath the surface of the broader market.
BlockBeats reported on Oct. 20 that Fu Peng, chief economist at New Huo Group, said the current U.S. stock market, represented by the S&P 500, is showing a clear mix of market-cap concentration and severe divergence in market breadth.
Fu said heavyweight blue-chip stocks, backed by passive inflows and crowded positioning, have kept broad indexes looking calm on the surface. At the same time, he said, the vast majority of stocks across the market have already seen deeper technical pullbacks. In his view, market breadth is approaching an extreme threshold, and the suppression in volatility could be broken at any time.
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