XLK:SPX Tech Sector to S&P 500 Ratio Monthly Chart; Tech Valuations Compared to the Broad Stock Market are Higher Than the Dotcom Bubble

The XLK:SPX ratio is higher than the dotcom bubble. The XLK ETF is the technology sector. The SPX is of course the S&P 500; the United States stock market. As valuations in tech stocks grow to the sky, outperforming the broad market, the ratio climbs to nosebleed levels above the dotcom bubble days. Watch out going forward.

Traders and investors are buying the FAANG stocks, chip stocks and any ticker that has tech in its name. The upside rally orgy is so obscenely bullish that it would make Caligula blush. Traders already had the tech stocks going to the moon on central banker largess but the afterburners were hit when the coronavirus (COVID-19) pandemic arrived. Folks in lockdown ran to their computers, television and smartphones for entertainment catapulting the tech stocks to further highs pumping the XLK:SPX ratio ever higher.

Whheeeee! Whooopie! Happy Days are Here Again. The dotcom bubble was 20 years ago so nobody remembers that carnage. All that matters now is central banker easy money booze to keep the party going. Whooopie! Yee-haw! Praise and Honor to the Federal Reserve, ECB, BOJ and PBOC, the four central banker horseman of the financial Apocalypse, that can send stock markets higher with a wave of their hand.

Heads-up you young tech workers. What are you doing? Most of you make a nice wage, you are driving a new vehicle, buying fancy clothes to look cool, and of course have a dozen fleece vests donning your company logo hanging in the closet. You proudly wear your fleece vest each day pontificating to the world that tech is the only thing that matters in life. You take those big bucks and buy AAPL, AMZN, FB, NFLX, GOOGL, MSFT, INTC, NVDA, QCOM, MU and other tech stocks and brag to the cute office girls that you are the reincarnation of Jesse Livermore. The current farce will end just as the dotcom bubble ended. Make sure you are not a casualty.

Be smart young folks. Get out of all those tech stocks. You likely made nice profits. Cash them in and let that money sit in cash for a while. Bring on a few short positions and spend time simply watching the markets. Things should get dicey going forward. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.