Tech Bubbles and SPACs

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 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.

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