(This story is for CNBC Pro subscribers only.) DoubleLine Capital CEO Jeffrey Gundlach believes there's a particularly troubling sign in the midst of the pullback in technology stocks. The so-called bond king made a slew of market calls during an investor webcast Tuesday evening. Here's a breakdown of his outlook: The tech-heavy Nasdaq Composite has lost more than 10% over the past three sessions, led by sharp declines in this year's market leaders — Facebook, Amazon, Apple, Netflix, Microsoft and Alphabet. Gundlach said the underperformance in these tech giants started about two months ago and has worsened, which could set up for a possible market collapse. "Since June or early July, FANG plus Microsoft has been underperforming the S & P 500, which is always something to look for when the leader in a massive blowoff move that we had into recent days, when that move is no longer showing the leadership that characterized the long bull market that preceded the blowoff, that's something to pay attention to," Gundlach said. "If we take out that low on relative performance earlier this summer, that's a very bad sign," Gundlach said. He also referred to these major tech stocks as "generals" who might have "abandoned the battlefield," adding it's still to early to tell. Most overvalued The correction in tech stocks was somewhat overdue given how elevated valuations were, according to the billionaire investor. He pointed to a valuation metric that Warren Buffett popularized — the S & P 500 market cap to GDP ratio. It's "the most overvalued in U.S. market history," Gundlach said. Looking at other popular indicators such as forward price-to-earnings ratio, Gundlach said the S & P 500's valuation is in "nose-bleed territory" and in the same ballpark as 1999, before the burst of the dot-com bubble. "Not quite as bad but looking like 1999," Gundlach said. "This is not a cheap market." The market has come a long way since the coronavirus sell-off in March caused the fastest bear market in history. The S & P 500 has jumped more than 50% from its March bottom to overtake its previous record. The market's epic comeback rally, led by major tech shares, came on the heels of unprecedented fiscal and monetary stimulus. Gundlach noted it was also "the greatest multiple expansion in 30 years." "This has been a melt-up of historic proportion in terms of its speed," he said. View on dollar, gold He said the market melt-up in the past few months coincided with weakness in the dollar, and the greenback strengthened recently amid the sell-off on Wall Street. Gundlach said he has turned slightly positive on the dollar but is still a "big dollar bear long term." The dollar climbed to a four-week peak on Tuesday as risk appetite waned on Wall Street. As for safe-haven gold, Gundlach said he has grown modestly negative in the short term after the massive run-up. Meanwhile, gold could weaken as the dollar strengthens in the short run. Gundlach said he remains bullish on gold in the long run. When the dollar weakens, gold tends to appreciate because it becomes cheaper for investors holding other currencies. Lastly, he restated his view on the election, saying a reelection of President Donald Trump is his base case and noted that containment of the coronavirus is a "large determinant" of the election.
