Markets this week unveiled a new stock index – the S&P 5000. Its predecessor, the S&P 500, is obsolete, having been transmogrified and enhanced by decadent dectupling prosperity.

Regular readers know we don’t subscribe to the prevailing theory that when asset prices rise, it’s prosperity, and when consumer prices rise, it’s inflation. Financology canon holds it’s all inflation, hitting different places at different times. We just don’t think these groups of prices live in separate universes.

Shrink the ruler and everything looks bigger.

But today we’re interested in the distribution of stock market inflation. One trendy way of doing this is to compare the performance of the Magnificent 7 with that of the S&P 493. Another is to compare the normal capitalization-weighted S&P with its equal weighted counterpart. Another yet is to compare the S&P with the remaining US stocks not blessed with membership in this august group, the completion index.

There are more. One can compare the Russell 1000 with the Russell 2000, respectively the largest 1000 and smallest 2000 stocks in the Russell 3000. A less popular but equally interesting comparison is between US and XS stocks … that is, the whole US market versus the rest of the world.

I’m not going to bore you with the detailed statistics. Instead what intrigues me today is that over the past several weeks – specifically since 2023 turned into 2024 – every one of these ways of measuring market breadth tells us it’s conspicuously absent. Messaging is uniform across the board. Any index which includes the handful of monster cap companies – the five or ten richest public corporations in the world – has been outperforming any index which doesn’t include them or which includes them at a lower concentration. Looked at the other way around, of the 10,000 largest stocks in the world, the 9,990 smallest have underperformed.

This is what technicians refer to as a narrow market. Underneath the shiny surface, the foundation is growing creaky. They also view it as an unsustainable circumstance, to be followed either by outperformance of the 9,990 or underperformance of the 10.

And more often than not, this also means underperformance of the whole lot relative to the established trend.