A volatility measure for large U.S. tech stocks has jumped, signaling increased worries about a key part of the market, according to Nicholas Colas, chief investment strategist at Convergex.
The implied volatility of the Technology Select Sector SPDR ETF (XLK) has surged more than 15 percent over the last four weeks, according to ivolatility.com data, while that of the S&P 500 overall has climbed less than 5 percent. At one point this week, the so-called Tech VIX was 45 percent higher from a month ago.
"The general move [in implied tech volatility] is powerful enough to show we went from extreme complacency in tech to rational concern as tech continued to move higher," he said, also noting that "it's hard to see other groups step in and provide leadership if tech begins to roll over."
Tech is the top-weighted sector in the S&P 500 and has been the best performer year-to-date with gains of 12 percent. Now it appears traders are worried that fundamentals like big tech earnings won't support those gains. The tech-heavy Nasdaq Composite index posted a record high Thursday.