Lo Chun-hong: US stocks show divergence at highs, a warning of outward strength masking internal weakness

Lo Chun-hong said the S&P 500 index is near its 52-week high, but fewer and fewer stocks are maintaining strength, with clear divergence in market internals, presenting a warning of outward strength masking internal weakness. The S&P 500 is calculated on a market-capitalisation-weighted basis, so a small number of large heavyweight stocks can keep rising and push the index higher even as many constituent stocks fall, meaning record highs in the index do not necessarily represent an equally strong overall market.