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It’s been an epic run for technology stocks, alongside the record-breaking eight straight of quarters of year-over-year U.S. GDP accelerating. But at long last, technology bulls are starting to grow complacent, explains Hedgeye CEO Keith McCullough.

Before we get to that, the backstory...

Following Facebook's (FB) terrible 2Q 2018 earnings – in which the stock fell as much as -20% – investors ran for cover, buying up protection on Technology stocks in options markets. As investors bid-up downside protection, the Technology stock ETF (XLK) showed an enormous implied volatility premium of 125%.

In options-market speak, an implied volatility premium means investors have bid up downside protection in anticipation of significant future volatility relative to recent historical volatility patterns. (Conversely, an implied volatility discount means investors expect future volatility to decline relative to historical volatility.)

We typically view extreme premiums or discounts as contra-indicators. The reason is behavioral and backed up by market history.

Here’s what happens. Investors expect a recent trend to continue into the future in perpetuity. As more and more investors jump on this trend, some opposing and significant market catalyst tips the balance in the other direction. After this, all the bandwagon investors head for the exits. For example, as fearful investors pushed up Tech’s implied volatility premium to 125% post-Facebook’s earnings recently, these future volatility expectations were eviscerated after Amazon’s earnings beat estimates.

Which brings us to today…

Technology investors are now growing increasingly complacent, explains McCullough. The most recent data shows a Tech implied volatility discount of -22%.

“An implied volatility discount on its own merit, never mind coming from a 125%-plus premium, would still be a drastic move. This is beyond a drastic move,” McCullough explains in the video above. “Now we officially have the bulls absolutely and utterly complacent in Technology.”

Add in lower highs in recently report 2Q 2018 earnings growth for the technology sector and it continues to appear that Tech bulls are growing complacent.

Watch the clip above for more.

McCullough: Bulls 'Absolutely Complacent' On Tech Stocks - the macro show