A widely-held assumption about rallying tech stocks is deceiving as smaller names lag, analyst Nick Colas finds 

Come Monday, the tech-heavy Nasdaq will try to kick-off its second positive week in a row. But it's poised to do so without small cap tech and Chinese internet companies.

According to veteran market watcher Nicholas Colas, much of Wall Street is mistakenly assuming that the technology sector's big surge is broad-based.

"It's largely a large cap phenomenon," the DataTrek Research co-founder said Friday on CNBC's "Trading Nation."

The Nasdaq is now up almost 25 percent over the past 52-weeks, while the broader S&P 500 is up 16 percent in that same period. Yet Colas noted that only a handful of super-sized tech companies — such as Amazon and Apple — have been instrumental in pushing the group higher.

"Large cap tech is up 17 percent. It's roughly half of the S&P's gains [year-to-date.] You can throw in Amazon and you get 70 percent of the S&P's gains for the year," he said. "But, for example, in small cap, the S&P 600, tech is actually underperforming."

While U.S. mega internet stocks are grabbing big gains, Colas pointed out China's equivalents, such as Alibaba and Baidu, have been under pressure.

"Looking internationally, for example, the tech narrative even falls apart there," he said. "China has almost as vibrant a market for internet and tech as we do, names there are down an average of 23 percent year-to-date."

Even though Colas detects pockets of pain in tech, he predicts momentum will continue to drive large U.S. cap tech names higher this year. He's not worried about valuations due to the bullishness of the economic cycle.

"We're still positive on large cap tech names," Colas said. "For the balance of the year, momentum seems very strong."

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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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