The tech-heavy Nasdaq 100 hit a record high this week, but the rally could be a sign a tech bubble is building, according to one technical analyst.
In a research note published Thursday, ICAP’s Walter Zimmermann Jr. shared a chart of the Nasdaq 100 divided by the small-cap Russell 2000, showing that the current divergence between the two gauges is sharper than it was at the height of the dot-com bubble.
While Big Tech is “immune to almost everything,” small-cap stock prices tend to be “very sensitive to the very first hints that trouble might be ahead for the U.S. economy,” Zimmermann wrote.