According to one technician, tech stocks are starting to look a lot like they did in 1994.
The S&P 500 technology sector has been one of the best-performing sectors of the year, up almost 8 percent compared to the flat broader market. And Ari Wald, head of technical analysis at Oppenheimer, says the group looks primed to take off again over the next couple years.
"We're still actually in the early-to-middle innings of big-cap tech outperformance that we do expect to continue over the coming year," Wald said Monday on CNBC's "Trading Nation."
Following the first Fed rate hike in 1994, the technology sector continued on to make new highs as the Russell 2000 small-cap index made new lows, Wald said. And even though today's market has not yet seen a rate hike, he said a similar story seems to be playing out in the charts.
Tech giants such as Alphabet, Amazon, Netflix all hit record highs in December amid the broader tech outperformance. And while the Russell 2000 hasn't made new lows, Wald said it may happen in the first quarter of 2016, should the market correct.
The relative comparison between tech stocks and small-cap stocks also seems to be setting the stage for continued leadership from technology, Wald said.
"1994 did mark the start of several years of tech outperformance that ended up in that parabolic move higher into the late '90s," Wald said. "This time around, tech's coming out of a 12-year relative base in a very steady manner."
But from a fundamental perspective, Erin Gibbs of S&P Investment Advisory points out that current tech company earnings growth is dwarfed by those in the 1990s. According to Gibbs, in 1994 the technology sector saw over 250 percent earnings growth. The following year saw 41 percent earnings growth. Comparatively, Gibbs said earnings are expected to come in at about 3.5 percent in 2015.
"For the next two years, the earnings growth for the tech sector is almost exactly the same as the S&P 500," she said Monday on "Trading Nation."
Tech valuations are also far below those of 1994 and 1995, Gibbs said, trading at a slight, but not particularly notable, discount to the S&P 500.
"We also don't see any big value plays here, they're trading about in line to their averages and with close to that which we see in the broader index. Fundamentally we just don't see any catalysts that we did see in the '90s, they look very different," she said.