(Bloomberg) -- Take out the few big tech companies that keep pushing the S&P 500 Index to all time highs and it looks like the engine is running on fumes. 

While the index is marching from one record to the next, fewer and fewer stocks are participating in this year’s rally. Nearly a third of its constituents have hit a one-month low in the past month, data compiled by Bloomberg through the end of last week show. That far outnumbers those that are pushing it higher. In fact, just 3.2% hit a one-month high, including Apple Inc. and high-flying Nvidia Corp., which just passed Microsoft Corp. to become the world’s most valuable company.

“Sellers are entering the market, and bulls are dancing on the edge of a knife,” said Andrew Thrasher, a technical analyst and portfolio manager at Financial Enhancement Group. “Everything is now dependent on pretty much just Nvidia and Apple. It wont take a whole lot to take this market down.”

While the S&P 500 has set 31 new records this year, few of its members outside of the technology high-flyers are participating in the advance. In the last three months, the 10 largest stocks in the index by market capitalization — mostly tech giants — have posted a median gain of 17%, while the rest have lost 1.3%, according to data compiled by Bloomberg Intelligence equity strategist Gillian Wolff. 


A bevy of measures show how market breadth remains weak, boosting uncertainty about the rally’s staying power. Take the NYSE advance-decline line, a popular indicator that tracks the number of securities rising minus the number falling on the exchange each day. It closed at a fresh six-week low on Friday.

The share of the S&P 500 stocks trading above their 50-day moving averages is also declining, down to 47% on Monday from 85% in late March and 92% in January. This is happening as a gauge of aggregate positioning in US stocks is hovering near multi-year highs, raising concern that investors have little room to boost equity holdings. A Deutsche Bank measure of equity exposure among discretionary and rules-based investors is hovering at the highest since November 2021. 

For now at least, the rally keeps chugging along. The S&P 500 rose 0.3% on Tuesday, putting its year-to-date gain at 15%. However, an equal-weight version of the index, which makes no distinction between the size of the companies, has trailed the market cap-weighted version by nearly 11 percentage points this year. If 2024 were to end now, it would be the second-widest gap since the dot-com mania in 1998 — right behind 2023. 

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