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|, Inc. (AMZN), NFLX, TSLA

By David Urani

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way-

-A Tale of Two Cities, Charles Dickens

Here we are, with the S&P 500 continuing to fluctuate just below its record high levels set on Wednesday, but it almost seems like the stock market and the media are making it their mission to convince you we're all doomed. The March employment report issued this morning showed a private payroll level above 116 million, which finally brings it back above the December 2007 peak. Yet, Janet Yellen would tell you that this level of employment is not maximized and that the economy needs ongoing stimulus from the government for an extended period of time. Meanwhile so-called market experts are plastering the television screens warning you of the impending crash.

But this is the game Wall Street plays sometimes. The action has the hallmarks of investors prudently taking some risk off the table as market valuations are getting robust, but you also get the feeling the high-rollers are trying to shake out all the little folks. It almost doesn't seem like a coincidence that Michael Lewis' "Flash Boys" is suddenly being fed to the public, warning the everyday investor that those sinister and enigmatic high-frequency traders have the market rigged against you. I'm not saying this is all part of a big plan, surely it's not, but sometimes Wall Street even welcomes a market pullback for a chance to get back into stocks at a lower price.

Likewise we don't fear a market pullback either, as we also like to buy on dips, and in recent weeks we have adjusted to a more defensive strategy accordingly. But at the same time, to think some sort of devastating crash is just around the corner is far overblown. Whatever the case, a market shifting over to a defensive mode may be exactly what we're seeing today. And we saw the same hints yesterday as well. Just look at the divergence in the S&P 500 (white) and the Nasdaq (green) over the past couple of weeks:

There's a big time rotation out of high-fliers and smaller, riskier names and into safer stocks. While the S&P 500 is down about 0.5% so far today, the Nasdaq is off 2%. Momentum tech names like Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX), and Tesla (NASDAQ:TSLA) are getting spanked badly today; each by 3-5%. Meanwhile hot industries like 3D printing, alternative energy and biotech are seeing comparable routs as well. The safety of gold is also being sought, with gold futures up 1.6%, and 10-year Treasury notes are up 0.6%.

It's looking like a real correction out there. But do not panic; the fundamentals are still intact. Sometimes a pullback can be healthy, and it can give you a chance to get back in to some of the names that you might have missed on the way up.