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Like an Escher drawing hanging in a students dorm room, the stock market has begun to look rational and irrational simultaneously. Nowhere is that more obvious than in the Nasdaq Composite.

The tech-heavy index has gained 18% this year, after practically ignoring the explosion of Covid-19 cases in places like Florida and Texas. It ended the week with three consecutive highs, and for good reason: The index is composed of the kinds of companies that can not only survive, but thrive, in a world where going about your normal, everyday business could get you sick.

Yet there comes a point when even the soundest argument starts to sound specious, even to those making it, and that seems to be what is happening now. Deutsche Bank analyst Jeriel Ong went on record with his worries about Apples (ticker: AAPL) rally, yet left his Buy rating intact and raised his price target to $400 from $380. Others warn that the big tech stocks are getting expensive and crowded, yet see no alternative when future economic growthand corporate profitscould be impaired. I compare the current environment to the Twilight Zone, says Ed Yardeni of Yardeni Research. There are so many possible ways this could go.

For now, though, it seems to only go upand there may be more to this than fundamental strength. Chris Harvey, U.S. equity strategist at Wells Fargo Securities, notes that when the Russell 1000 Growth index was rebalanced on June 26, the combined share of Apple, Microsoft (MSFT), and Amazon.com (AMZN) rose from 25.3% of the index to 28.6%. Just getting to an index weight required a lot of buyingand most active mutual-fund managers were underweight. With those stocks among the years best performers, it meant managers would underperform the growth index by even more unless they started buying.

While the shift toward the biggest techs is most pronounced in the Russell 1000, most indexes are seeing the same. At Thursdays close, technology made up 28% of the S&P 500, up from 21.5% on Nov. 8, 2016, when the Real Estate sector debuted. The Communications Services sector, which includes Facebook (FB), Alphabet (GOOGL), and Netflix (NFLX), has increased to 11.1% from 2.5%.

Economically sensitive sectors have stayed about the same, and are largely immaterialmaterials, utilities, and real estate have 2.5%, 3%, and 2.8% weightings, respectivelyor seen their shares decline. Energy has fallen from a 7.2% weighting to 2.5%, while Financials have dipped to 9.7% from 13.4%.

A friend wondered only half-jokingly how long it would take for the SPDR S&P 500 exchange-traded fund (SPY) to have the same weightings as the Invesco QQQ ETF (QQQ), which tracks the Nasdaq 100. But it is also clear how reliant the market is on the tech stocks in the Nasdaq for further gainsand how that could lead to future losses. Its a conundrum for investors, who know they are in the same trade together, says Nordea strategist Sebastien Galy.

Like it or not, were all tech investors now.

Write to Ben Levisohn at Ben.Levisohn@barrons.com

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Tech Stocks Have Been the Markets Stars. Are They Overbought? - Barron's