Nasdaq's streak of record highs has sucked investors into top names like Apple,
The 'long Nasdaq' trade replaces the bullish U.S. dollar trade as the most crowded. The dollar held that spot for five months.
Nasdaq's tech-driven gains have outpaced those of all other major U.S. indices. It is up 14.2 percent year-to-date, versus the Dow's 6.2 percent and a gain of 7.3 percent in the . The Russell 2000 is up just 2.7 percent.
The Nasdaq, at a new closing high Monday, has gained 29 percent to 6,149 over the past 12 months. Shares of Apple, Amazon, Facebook and Netflix are all up about 30 percent this year.
Biotechnology also is a driver of Nasdaq, and the IBB iShares Nasdaq Biotechnology ETF is up 10.8 percent year to date.
"Investor sentiment is bullish," said Michael Hartnett, BofA Merrill Lynch chief investment strategist, in a statement. "But irrationality is not yet visible despite all-time highs in credit and equity markets, robust global
Traders will sometimes want to flee positions that become too crowded on the notion that once a majority of investors are long something, there is no one left to buy. Case in point, the long dollar position was the most crowded trade in the December survey and the currency, as measured by the dollar index, just fell to its lowest level since November.
The long dollar trade is still the third most crowded.
The fund managers viewed European equities as the second-most-crowded trade. In the month of April, allocation to euro zone equities was the highest since March 2015 and the third highest in the history of the monthly survey. Fifty-nine percent of the managers were net overweight Europe.