The Nasdaq 100 is in an ostensible bull market. Maybe you heard.

I say “ostensible” not just because it seems a bit premature to suggest equities’ troubles are over. There are also legitimate concerns about the durability of leadership, which is obviously quite lopsided.

A simple ratio of the equal-weighted big-tech gauge to its cap-weighted counterpart suggests that outside of the pandemic boom, when America’s mega-cap tech titans reached their zenith, breadth has never been this poor.

That comes with the usual caveat: There are so many ways to measure breadth that I almost hesitate to broach the subject. Everybody has their own preferred indicator, and sometimes this can be a contentious debate, absurd as that is (if you can’t find anything better to argue about than market breadth indicators, I worry we don’t have much in common).

Big-tech’s advance in 2023 comes courtesy of Apple, NVIDIA, Microsoft, Meta, Tesla and Amazon, which together account for a disproportionate share of performance. And you can spare me the protestations about some of those companies not counting as “tech.” I get it, but it’s cumbersome to differentiate for the purposes of general interest articles.

Note that the Nasdaq 100’s Q1 gain is approaching 20%. The index hit its highest intraday levels since August on Thursday.

If you don’t count the rebound from the original COVID panic, Q1 2023 is set to be the best quarter for big-cap US tech in 11 years.

This is an oversimplification, but generally speaking, there are a trio of factors at play here. First, the recent move lower in bond yields bolstered long-duration equities. Second, the perceived safety of big-tech was attractive to some investors amid the bank worries. Third, tech was the hardest hit during last year’s aggressive rate-hiking campaign, so it has “more to gain” in a rebound, or at least that’s how some investors will see it.

There are myriad concerns you could raise, not least of which goes something like this: Top-line growth has decelerated dramatically for the titans, and while some of that is just the inevitable snapback from unsustainable pandemic trends, the fact that management extrapolated those trends and hired as though they’d persist indefinitely says something about management. Further, there are signs that key growth drivers (e.g., cloud) are faltering. And so on.

Overall, the Nasdaq 100 remains some 22% from the highs.

Some would also suggest that the Nasdaq has been bolstered by liquidity provision. After all, the net global liquidity impulse was positive from October through end-January as BoJ bond-buying, PBoC lending, a weaker dollar and other factors overwhelmed Fed QT. And, over the past two weeks, the Fed’s balance sheet has “grown.” I’ve weighed in on those points so many times that I assume most readers are tired of hearing about it.

The risk going forward centers around growth and the specter of margin compression. Tech has cut jobs aggressively, accounting for a third of global layoffs since October+, but the sector isn’t traditionally very adept at cost-cutting. And, ultimately, bears still contend that investors are complacent and harbor misguided assumptions about tech’s “haven” characteristics. To recycle a Mike Wilson quote from this week, “We reiterate our long-standing view that technology companies are pro-cyclical and not as defensive as perhaps many market participants believe.”