These measures of volatility represent how much traders are paying to hedge against downside moves for the respective indexes. As expectations for volatility rise, it gets more expensive to buy insurance against a potential fall. The Nasdaq 100 and S&P 500 volatility measures differ by 7.5 as of July 3.

The strategist shared his key reasons why Nasdaq volatility levels are rising versus S&P 500 and why it may foreshadow a tech sell-off in an email.

He noted that investors are rotating to value stocks and away from growth stocks. "As we start Q3, growth continues to lose leadership," he also said in his report.

During the first half of this year, 41 stocks in the Nasdaq 100 rose 30 percent or more. Further, he said in the email, there was a connection between bond prices and the rise in the Nasdaq 100, and now they are going down together. His conclusion: "Valuations are insane" in the Nasdaq 100.

McDonald warned his clients that technology may under perform in the coming months and recommended investors trade ahead of the potential decline.

"Getting out in front of the rotation is more important than valuation as capital flows out of highly concentrated trades it has to go somewhere in a bull market. It's a growth into value tsunami," he wrote.

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Investors are increasingly worried about a coming drop in technology stocks - CNBC