Semis stocks are blazing higher.
Matt Maley, chief market strategist at Miller Tabak, says momentum could take the group higher, though one technical indicator is making him nervous.
"You are getting quite overbought," Maley said on CNBC's "Trading Nation" on Wednesday. "It's now at a 61% premium to its 200-week moving average. There's only one other time that it was at more of a premium to that average since the credit crisis."
The SOXX climbed more than 73% above its 200-week moving average in March 2018. From that peak to a trough in December 2018, shares declined by more than 27%.
"Also, if you look at the weekly [relative strength] chart, it's right at a level here that has been followed by significant or fairly decent pullbacks in the group several times in the past," said Maley.
Maley notes that it's not the worst overbought conditions he's ever seen so it could still peak above this from a historical standpoint. In 2000, for example, semis got to a 260% premium to its 200-week moving average with its relative strength index above 89. An RSI measure above 70 typically suggests overbought conditions.
Boris Schlossberg, managing director of FX strategy at BK Asset Management, is also skeptical the rally in semis can roll on.
"Chips are trading very much on 'hope-ium'," Schlossberg said during the same segment. "Shorting momentum is very dangerous, but having said this at this point if you look at AMD which is the poster child for the whole sector, it's trading  times trailing earnings. That's a great company, but the stock is essentially set up to fail."
On a trailing earnings basis, Advanced Micro has not been this expensive since mid-2018. The SOXX, by comparison, trades at 28 times trailing earnings.
"I do not want to chase stocks at this level. I think the danger of a pullback right now is extraordinarily high," Schlossberg added.