U.S. stocks are no longer gripped by fear, only FOMO remains! Wall Street institutions: This scene is very reminiscent of 1998.

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The US stock market's technology sector is in a historically overbought state, with market fear almost vanishing. Investors' only concern has shifted from "decline" to "missing out." Wall Street technical analysts warn that the current trend closely resembles several historical extremes, with the most alarming comparison pointing to the deep correction of over 20% in 1998.

BTIG Chief Technical Strategist Jonathan Krinsky notes that if this week's closing remains at current levels, the S&P 500 technology sector will record the strongest 10-week gain since records began in 1990, rising a total of 44.6%. Meanwhile, the VIX daily sentiment index touched 13 last night, reaching its lowest level of the year and indicating that demand for hedging downside risk has plummeted to an extreme low.

The danger of the current signals lies not only in the magnitude of the rise, but also in the emerging structural divergence — the technology sector as a whole continues climbing, but the “Tech Magnificent Seven” (Mag7) have fallen a cumulative 2.3% since mid-May, showing that leading momentum is narrowing. The macro backdrop is also subtly shifting: US Treasury yields are rising, oil prices are climbing, Japanese interest rate pressure is resurfacing — but the stock market chooses to ignore all this.

Historical Extremes: Only Ten Occurrences, Most Ended Poorly

Krinsky’s research shows that the S&P 500 Technology Sector Index (S5INFT) current RSI is at 82, and it’s 28% above its 200-day moving average. This combination of “overbought and severe deviation” has only appeared in ten separate periods since 1990.

Of these ten historical cases, some ended positively — May 1995 and July 1997 were such examples. But Krinsky points out that most of the other cases saw notable consolidation or pullback within the following 40 trading days.

The most recent occurrence of such a signal was June 2024, preceded by August 2020, and further back, December 1999 — which was right before the dotcom bubble finally burst.

Netscape Comparison: Historical Reference Points to July 1998

There is widespread discussion comparing the current AI bull market to the internet boom of the 1990s. The common parallel is: November 2022’s launch of ChatGPT, corresponding to December 1994’s launch of Netscape browser.

If this timeline analogy is followed, the current time point exactly aligns with July 1998. Krinsky notes that July 1998 was the most severe starting point for correction in his “overbought and stretched” study — the S5INFT fell over 20% afterwards, bottoming only in October 1998.

This analogy provides a specific risk reference for today’s market: it’s not an immediate bubble burst, but a sizable medium-term adjustment after severe extension.

Big Seven Lagging, Breadth Narrative in Doubt

Despite strong overall performance in the tech sector, internal structural divergence is emerging. Since mid-May, S5INFT has gained about 7%, while the Mag7 as a group has dropped 2.3%.

This means the recent gains in the tech sector aren’t led by prior core leaders, but have been driven by broader tech constituent stocks. While this “handoff” can be interpreted as expanding breadth in the short term, with technical indicators at historic extremes, the weakness of leading stocks could also be an early sign of exhausted momentum.

Macro Background Shifting, Market Chooses to Ignore

Meanwhile, the macro environment supporting this rally is quietly tightening. US Treasury yields are rebounding, oil prices remain elevated, and uncertainty in Japanese interest rate policy is rekindling global rate pressure.

The stock market is currently immune to these signals, but history shows that higher rates ultimately tend to meaningfully depress valuations. The current sentiment structure — VIX at yearly lows, option skew narrowing, and persistent speculative demand — means investors are massively abandoning downside protection and betting fully on the upside.

As Krinsky concludes: There is no real fear left in the market, only FOMO — fear of missing out.

Risk Warning and DisclaimerThe market carries risks; invest prudently. This article does not constitute personal investment advice, nor does it take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, viewpoints, or conclusions herein fit their particular circumstances. Investments made in accordance are at your own risk. ```