Stocktake: Market rally continues to broaden

For a long time, market sceptics complained that indices were dangerously reliant on a handful of large-cap tech stocks like Apple, Amazon, Google and Facebook. That's no longer the case.

Over 15 per cent of S&P 500 stocks hit new 52-week highs last week, notes Bespoke Investment, one of the strongest readings of the last year. The tech sector continues to lead the way; indeed, 35 per cent of the sector’s stocks hit new 52-week highs last week, one of the highest readings in history.

Nevertheless, this rally is an increasingly broad one. Most other sectors are also seeing their number of new highs hit strong levels, says Bespoke. This is especially true of the communication services, financials and materials sectors, which registered readings that were in the top decile of all days since at least 1990.

Stocks may well be overvalued, as sceptics claim, but market internals suggests this is a healthy rally and that any selloff is unlikely to be a protracted affair.