Wall Street's 'fear gauge' will signal whether a dotcom bubble repeat lies ahead, analyst says

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The market's seemingly narrow leadership this year has raised concern about a potential market downfall similar to the one experienced around the turn of the millennium.

The S&P 500 has stormed back to positive territory for the year this week after being down more than 30% for 2020 at one point. A big chunk of that rally has been driven by gains in six of the major tech-related names — Facebook, Amazon, Apple, Netflix, Google-parent Alphabet and Microsoft.

Apple and Microsoft are both up more than 30% in 2020. Alphabet and Facebook have jumped 16.7% and 18.1%, respectively, in that time period. Amazon and Netflix are up 68.9% and 52.2%, respectively, this year. But the rest of the market has struggled to keep pace with these high-flying stocks, stoking fears that a bubble may be forming.

Nicholas Colas, co-founder of DataTrek Research, thinks investors will get confirmation on whether the market will see a repeat of the dotcom bubble bursting from the Cboe Volatility Index (VIX), Wall Street's preferred "fear gauge."