The S&P 500 hit a record closing high on the last trading day of May, but few stocks drove the index higher. Foreign media quoted Bank of America strategist Michael Hartnett as saying that this structure is similar to the market performance at the peak of the dot-com bubble in 2000.

Only 20 stocks hit new highs simultaneously.

Bank of America pointed out that when the S&P 500 closed at a record high last Friday, only 20 component stocks simultaneously hit new highs. Hartnett believes this is similar to the characteristics of the dot-com bubble bursting in March 2000, when only 20 stocks reached new highs when the market was at its peak.

This surge was primarily driven by AI-related sectors, particularly semiconductor and memory chip companies. The report noted that AMD, Micron, SK Hynix, and Samsung Electronics have seen significant recent gains, with funds clearly concentrated in a few leading technology and chip companies.

The gains were concentrated in AI and chip stocks.

The Nasdaq Composite Index surged 25% in April and May, marking one of its best performances for the same period in over two decades. However, many institutions believe that the index's strength has not translated into a broader rally in individual stocks, and market breadth remains weak.

In a report dated May 23, Oppenheimer technical analyst Ari Wald stated that after the rapid rebound in early April, market indicators have consistently failed to keep pace with the index performance. The advance/decline line rose briefly at the end of March but has declined since mid-April.

The organization alerted the defense signal.

Data from BCA Research shows that as of May 20, only about 55% of the S&P 500 components were above their 200-day moving average. The firm believes that although both US and emerging market stock indices are hitting new highs, the gains are very limited, and poor breadth often indicates weak market fundamentals.

In his report, Hartnett suggests that as the market nears its peak, investors should consider gradually shifting towards defensive assets. He reviews the performance of various bubbles since 1929, noting that after a bubble bursts, long-term bonds and defensive sectors, or sectors that significantly underperformed in the later stages of a bubble, tend to attract more capital.