. . . As said Kostin, many market players have expressed their disbelief included the fact that the S & P To return to our thesis that the market is now only 5 Inventories, next Kostin notes because many of Recent outperformers were also market leaders before coronacrisis, their recent gains led to a sharp increase already high market concentration. This gap of 11 percentage points is a measure of market breadth. Which brings us to the ominous warning from Goldman # 1. However, thereafter, the narrow width of the market is always resolved in the same way. If that was not enough, Goldman also has an ominous warning # 2, that a sharp decline in market size in the past, the kind we now see, have often reported large drawdowns market. More confusing for alleged stock pickers is that not only increase the return dispersion in the market selling off, but it also increased during the market recovery. However, below the surface of the market, the median S & P. ​​What does this mean in practice? Goldman concludes, since 1980, its long / short factor Momentum generated a median unconditional return 12 months of 400 bp, but a return of 12 months of 300bp after periods of narrow width as the market today. Now if only we had the same level of comfort as Goldman, we go out of a major market correction instead of just enjoying a bear market rally folder as shown in the table of Deutsche Bank. where the divergence is now unparalleled. However, Goldman refused to put a time line prospects austere and notes that periods of narrow width market can last for long periods. And this pessimistic view, Goldman that there two weeks ago called the bottom in the S & P500., Joined the famous Morgan Stanley Michael Wilson warned bull bear that stocks are now oversold and that a correction will begin soon. To confirm this observation, notes that Kostin basket strong balance sheet Goldman is back 5% YTD while the low basket stock returned 27%. Ultimately, however, is that in both cases, a base relative to the outperformance of the market leaders eventually gives way to underperformance. month Which brings us to what is a concern most cited among Goldman clients. What’s weird is that this division on the market took place despite the average correlations of stocks reached the highest levels ever recorded, a dynamic that usually reduce the dispersion of return. Which brings us to something that we have shown it two weeks ago, when we found that the S & P. ​​In other cases, an improved economic outlook and strengthen the laggards help investor sentiment catch up with the market leaders, which also results in a violent pull that leaders repriced significantly lower. As a result, many stocks that outperformed during the sales market continued to outperform even with the S & P Finally, Goldman has a word of hope to all who were crushed by growth on value and a great smaller roller cap. Indeed, as noted above, the market swooned in late February and March, investors turned to strong balance sheets, large-cap technology companies, and other quality names considered safe havens. 500 clues, but raised concerns among investors about the narrow scope of the market. 500 shares represented 18% of the market value of the index corresponding to the part on top of the bubble Tech March 2000, since then, these stocks (MSFT, AAPL, AMZN, GOOGL, FB) increased to represent 20 % of Cape market, which is the highest recorded concentration. 500 index to continue rising without wider participation base. Gains Come From only 5 Stocks With a third of companies that provided Q1 results to date, the results season turned out to be neither a spoiler or a catalyst, with a modest market reaction really horrible numbers investors are now ready to disregard of earnings up well in 2021 when a V or U-shaped recovery should kick. However, the greatest market concentration increases, it will be for the S & P. ​​In other words, if the dispersion continues to skyrocket, and if the entire increase in the S & P500. First, small caps and laggards outperformed out of each bear market and significant market correction over the last 40 years. 500 stock one standard deviation above the average compared to often strong rallies lead to large drawdowns as a handful of market leaders ultimately fail to generate enough fundamental earnings power to justify the high valuations and crowding of investors . In addition, in the past, a wide dispersion evaluation was a strong signal for the stock outperform value of 2 and 3 walks of the year, but was much lower indicator for short-term returns. Taking this observation, David Kostin in his latest weekly Kickstart Goldman wrote that the fundamental volatility captured in reports 1Q earnings explains why the return dispersion stock jumped to the highest level since the financial crisis. In these cases, the market leaders catch down to their weaker peers