Big tech's takeover of the stock market is ‘greatly exaggerated,’ Oppenheimer says

"The report of my death is greatly exaggerated," Mark Twain wrote to a newspaper when it was inaccurately reported he'd died, before his actual death in 1910.

A similar sentiment exists among some market participants today as mega-cap technology stocks have soared. Some strategists believe the assessment that the market's technology leadership is too concentrated — a narrow rally comprised of just a handful of big players — is overstated.

"Narrow leadership is often confused with narrow participation, and inaccurately cited as a market negative," said Ari Wald, head of technical analysis at Oppenheimer, in his latest note to clients entitled, "Reports of Narrow Tech Are Greatly Exaggerated."

Whether big technology stocks' outsized gains are cause for concern and indicative of a top-heavy, vulnerable market is a chief debate across the investment community, particularly as the size of high-flyers like Apple, Amazon and Netflix have swelled this year.

Wald is of the mind that the technology sector's gains are reasonably spread among many participants this year. Specifically, he points to healthy market breadth — the number of stocks advancing relative to the number of stocks declining — in the broad Russell 3000's technology sector. The entire index represents about 98 percent of the investible U.S. equity market.

"About 71 percent of the stocks in the technology in that universe are positive year-to-date; not just five 'FANG' stocks," he said Monday on CNBC's "Trading Nation."

"Selling tech based on narrow participation just doesn't fit that narrative," he added.

Others agree with the premise that technology's gains this year haven't been as "narrow" as some think.

"This isn't necessarily a negative data point out there, just that tech is over-performing. We don't see that in the marketplace either, even as the market was, call it, 'de-FANG'd' a couple of weeks ago, and people became more and more concerned about the ripple and what that might actually be into the broader market. We didn't really see any real fear in the market," Stacey Gilbert, head of derivative strategy at Susquehanna, said Monday on "Trading Nation."

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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 CNBC and 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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