Stocks are trading like it's 1999, and that's actually a good thing

Is there such a thing as too much momentum in today's market? Not according to one technician, who says stocks haven't seen this much force since 1999.

Jonathan Krinsky of MKM Partners compared the MSCI Momentum index, which tracks stocks with the best performance over the prior year, with the S&P 500.

"The spread between the two is 15 percent for the year right now," he said Monday on CNBC's "Trading Nation." "That's the biggest spread in favor of momentum since 1999, so it's not surprising that we're getting people thinking that we've gone too far."

While the market's sustained momentum has some investors nervous, Krinsky said it isn't showing hints of two key indicators that show the trade is going too far.

The first is when momentum stocks stop outperforming and start breaking down below their moving averages. The second is when they extend even higher from their moving averages, creating what the technical analyst calls a "blowoff scenario," where essentially the stock runs up too far and "exhausts all the buyers."

Since neither scenario looks to be on the horizon, Krinsky says the typical high momentum stocks, namely the FANG stocks, banks and some of the semiconductor stocks, still have room to run.

But if investors are looking for more of a catch-up trade, Krinsky also believes energy stocks are looking more attractive. The "anti-momentum trade," as he refers to the sector, has actually seen heavier trading volume on positive days despite still being the second worst-performing sector of the year.

The Dow, S&P 500 and Nasdaq all closed at all-time record highs on Monday.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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