A quartet of tech heavyweights — Apple, Microsoft, Amazon and Facebook — collectively make up more than 10 percent of the S&P 500. Some strategists say that weighting makes the market precariously top-heavy, while others say investors have little to worry about.
"The bigger they are, the more they're going to fall," Gina Sanchez, CEO of Chantico Global, said Tuesday in an interview on CNBC's "Power Lunch."
"They've each proven to be defensive in some way, which doesn't make any sense, but here it is. Technology is the core of everything we're looking at, going forward," she said.
Specifically, Amazon continues to take market share from traditional retailers; Apple has not innovated much past the iPhone, but demand for the product is still strong.
"Each of these stocks has an individual positive result, and what it's telling you is that the rest of the market doesn't have a good story. That's the bigger problem," Sanchez contended on Tuesday.
In a recent report, Fundstrat Global Advisors head of research Tom Lee pointed out that equity performance has indeed been concentrated, writing that since "[a] lot of the heavy lifting is being done by a handful of stocks," the market is not as strong as it might appear.
On the other hand, Oppenheimer head of technical analysis Ari Wald said the performance of these four tech names (regardless of their collective weight) is indicative of a robust market.
"The fact that these stocks are doing well tells us nothing else about the rest of the market; the rest of the market is holding up fine, they're just not rallying as much," Wald said Tuesday in an interview on CNBC's "Power Lunch," adding that "we are not seeing breakdowns anywhere else in the market."
Furthermore, the four stocks' strong performance year to date and the question of whether this is a negative or positive for the market highlights precisely why so many investors find it difficult beating the broader market, Wald suggested a bit mischievously.
As investors, "we want to sell our winners and buy our losers. This is the exact opposite thing what the S&P 500 does. The S&P 500 does not get rebalanced; the better-performing stocks become bigger parts of the average. It lets its winners run. It is essentially a momentum strategy," he said.
Wald is referring to the way the S&P itself is composed, as a market-cap-weighted index: A company's value determines its weight in the S&P.
Some have gone a step further, arguing that passive investing leads already-overvalued stocks to become even more overvalued, as new money is allocated on the basis of existing (relative) sizes.
Hedge-fund managers such as Bill Ackman and David Einhorn, for instance, have argued that index funds essentially resemble a momentum-chasing strategy, with already-winning stocks doing increasingly well.
Wald looks on the bright side, however, pointing out that momentum strategies have tended to do quite well. Further, the technical analyst says he doesn't see cracks in Apple, Microsoft, Amazon or Facebook, and forecasts that they will head higher.
The information-technology sector is the best-performing sector so far this year, up nearly 17 percent year to date, and has rallied to levels not seen since the infamous "