On November 5th, the Nasdaq Composite Index closed down 5.52%, the S&P 500 Index closed down 4.36%, and the Dow Jones Industrial Average closed down 3.44%. Looking at market structure and specific details, capital concentration decreased, and market breadth improved somewhat.
1. The difference between the S&P 500 equal-weighted index and the market capitalization-weighted index rebounded from the previous trading day, reaching a new high since the end of July and near the upper limit of its nearly one-year fluctuation range, indicating that large-cap stocks fell more sharply, while other stocks were relatively more resilient.
2. The Russell 2000 index, representing small-cap stocks, closed down 4.45%, performing between the three major indices, having fallen to its lowest level since October 16th during the session.
-------- Note: The difference between the S&P 500 equal-weighted index and the market capitalization-weighted index reflects the breadth of gains or losses in the US stock market and the concentration of market performance.
1. A widening difference indicates that more stocks are outperforming large-cap stocks. If the market rises, this means the upward momentum is spreading to more companies, and the market is likely to see a broad-based rally. If the market falls, it means that large-cap stocks are falling more sharply, while other stocks are relatively more resilient.
2. A narrowing difference indicates that market performance is more dependent on large-cap stocks. If the market rises, it means that the gains are mainly driven by large-cap stocks such as tech giants. If the market falls, it means that more small and mid-cap stocks are falling more sharply, while large-cap stocks are relatively more resilient.
3. A negative difference means that the equal-weighted index is underperforming the market capitalization-weighted index. However, whether there is a risk of over-concentration needs to be assessed in conjunction with the historical level and trend of the difference.
