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Data: SentimenTrader; Chart: Axios Visuals

An index measuring optimism in the Nasdaq 100 rose on Friday to its highest level since just before the dot-com bubble burst.

What's happening: The three-month average of SentimenTrader's Nasdaq Optimism Index is at the highest level since 2000 and its 30-day average is at one of the highest levels ever.

  • Further, the number of media stories mentioning the word "bubble" has risen to the highest level since April 2000, SentimenTrader's data shows.

What it means: The Optimism Index (Optix) for ETFs is based on...

  • Trading activity in put options versus call options.
  • Future volatility expectations.
  • Average discount of the fund to its net asset value.
  • Price behavior.

How it works: "Each measure is ranked against its historical norms to determine whether or not the current level is at an extreme, then totaled to come up with an overall score," the company's Troy Bombardia tells Axios in an email.

  • "The Optix can go from 0 (maximum pessimism) to 100 (maximum optimism)."

What they're saying: "The similarities between today and the dot-com bubble are stacking up," Bombardia said on Twitter.

  • "History tells us that this is a dangerous time to be full-bore bullish. Such extreme sentiment often led to large pullbacks & corrections. Monitor this risk closely in the weeks ahead."

But, but, but: "Unlike almost every other sector, the tech sector has actually benefitted from COVID-19 as it has increased the role that technology plays in the lives of many people," Pat Keon, senior research analyst at Lipper Refinitiv, said in a note.

  • "The coronavirus has forced large swaths of corporate America to work remotely and pushed shopping habits even more online and further away from brick-and-mortar stores."
  • "These changes have further emphasized the importance of technology in the day-to-day routines in the modern world."

Go deeper

Dion Rabouin, author of Markets
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