by David Kranzler
Investment Research Dynamics
The following is an excerpt from the latest issue of my Short Seller’s Journal:
I thought this chart showed yet another interesting signal that the stock bubble could be ready to pop:
[…] It shows the spread (the difference) in the percentage sector weightings in the SPX between Technology and Energy & Financials. Prior to 2000 and between 2002 and 2016, the Energy/ Financial sector had a higher percentage weighting in the SPX than Technology. Currently the differential in the percentage weightings between Tech and Energy/Financials is negative. The last time this differential was negative occurred at the peak of the dot.com/tech bubble.
My interpretation is that the technology sector is a bellwether indicator of when market speculation becomes extreme and when retail piles into the action with blind ambition.