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The Nasdaq 100 is on pace to do something it hasn’t since the tech bubble

Nasdaq 100 outperforming Russell 2000 by huge margin

It's been a great year for big tech stocks, and a pretty meager one for the small caps; the Nasdaq 100 index is up 20 percent this year, while the Russell 2000 has risen by less than 3 percent, through Thursday's close. If that pace continues, 2017 will witness the greatest outperformance for the Nasdaq 100 as compared to the Russell 2000 since 1999.

To be sure, even if the Nasdaq 100 does beat the Russell 2000 by 40 percent this year, that will still only represent half of the staggering, 82 percent outperformance seen in 1999, when the Nasdaq 100 more than doubled in value. That came on the back of an 85 percent rise for the Nasdaq in 1998, a year in which the Russell actually dropped.

This year, the disparate performances for the two indices can be pegged largely on the huge surge seen in a few big tech stocks, as well as the more general matter of sector mix.

Just five companies now make up more than 40 percent of the Nasdaq 100: Apple, Microsoft, Amazon, Facebook, and Alphabet. All have performed exceptionally this year. In fact, Piper Jaffray technical analyst Craig Johnson found that without the so-called "FANG" stocks (Facebook, Amazon, Netflix and Google parent Alphabet) the Nasdaq would have advanced just 13 percent this year. And this 13 percent figure includes the large contribution of Apple, which is the largest component and has gained about 33 percent this year.

The outperformance of the big-tech-fueled Nasdaq 100 could speak to "this winner-take-all economy that we're in, where a few large companies are getting a bigger and bigger share of the profit pie," said Boris Schlossberg of BK Asset Management.

"This is actually not a good thing for the economy or for the society as a whole," Schlossberg said Thursday on CNBC's "Trading Nation."

At the same time, sector performance has been a large factor as well. The Nasdaq 100 is 58 percent information technology, 22 percent consumer discretionary, and 10 percent healthcare; of that consumer discretionary piece, nearly half is made up by Amazon, Priceline, Netflix and Tesla, which might be broadly characterized as tech stocks.

Meanwhile, the Russell 2000 is just 18 percent information technology. Financials are the heavyweight, with a 19 percent weighting, and industrials make up 14 percent of the index. So far this year, the information technology sector is the big market leader followed by consumer discretionary, and financials have lagged far behind.

For Schlossberg, there's a political flavor to this sector story.

"The Russell [is showing] disappointment in the Trump trade, in the sense that a lot of people were waiting for a lot of things to help small businesses — tax policy, regulatory policy — and none of that has really come through," the strategist said.

After all, the small-cap index surged following Donald Trump's election. Financials and industrials were supposed to be serious beneficiaries of his regulation-slashing, infrastructure-building policies. And more generally, trade-protectionist policies were supposed to harm large multinational companies while perhaps helping small domestic ones.

With little having been done in Washington, that trade has dramatically turned around. Meanwhile, hopes for lower taxes on repatriated money is good for tech companies hoarding money overseas.

The fact that tech has led so dramatically, meanwhile, is not a good thing in Johnson's book.

"As a technician, I want to see the rest of the market kick in before we can really make that big leg higher in the overall market," Johnson said.

Despite this year's trend, the Russell is enjoying a good start to Friday, following an impressive Thursday performance.