Amazon and Netflix live in a different reality from the rest of the market. As the S&P 500 clawed back from February sell-offs, the two have already hit a handful of new record highs.
And that move has one widely followed technician on watch.
"Both Amazon and Netflix are making new highs whereas a lot of other indexes aren't," Craig Johnson, chief market technician at Piper Jaffray, told CNBC's "Trading Nation" on Thursday. "When we've seen this kind of narrow market breadth, it's not really a healthy sign for the overall market. We want to see a lot of companies participating. … That worries us."
Amazon has made 12 new all-time highs since markets hit records on Jan. 26, while Netflix has scored seven. Meanwhile, just one-tenth of the Dow has recovered to see those January highs again and only a fifth of the S&P 500.
Netflix is the best performer on the S&P 500 in the year to date, and it beats the other components by a wide mark. The online streaming service's 70 percent gain in 2018 is far better than the 58 percent gain in XL Group, the second-best performer. The Consumer Discretionary XLY ETF, the fund that houses Netflix, has increased just 7 percent.
Amazon's year-to-date increase tells a similar story. The e-commerce company has risen 34 percent so far this year, putting it on track for its fourth positive year in a row. Amazon is the second-best performer in the XLY ETF and the fifth-best on the S&P 500.
Amazon's breakneck gains trouble Michael Bapis, partner and managing director at the Bapis Group at HighTower Advisors. He sees its current price as overvalued.
"It does not play by the rules of traditional stock earnings and P-E ratios," Bapis said during the same "Trading Nation" appearance on Thursday. "It's hard to buy companies trading at 250-plus times earnings that have run up so much."
Amazon currently trades at 155 times forward earnings and 255 times earnings over the past 12 months, while Netflix trades at 108 times forward earnings. Both companies have a price-to-earnings ratio well above the S&P 500's 17 times forward earnings.
"To me, it looks like 2000, 2001, when these companies were getting so high-priced and there was such a craze around them," added Bapis. "They've driven the markets for two-and-a-half, three years so you've got to see a pullback."
The information technology and consumer discretionary sectors are the two best performers on the S&P 500 in 2018 with gains of 11 percent and 7 percent, respectively. Both are ahead of the S&P 500's 3.8 percent increase. The two sectors are on track for a 10th positive year in a row.
On the market as a whole, Johnson expects to see this slow crawl back to records for the S&P 500 and Dow but will keep a close eye on the divergence between companies such as Amazon and Netflix and broader markets.
"We're still going to be in this kind of backing and filling until we see the breadth of this market really starting to ride out," he said. The narrow market breadth is "something I really want to watch carefully in coming weeks and months."